Pubs to be

proud of

ANNUAL REPORT AND ACCOUNTS 2023

Marston’s PLC Annual Report and Accounts 2023

Pubs to be proud of

The local pub is at the heart of every community, and we

are proud to have a pub for everyone and every occasion:

whether that’s a family celebration, watching the football

with your friends, a social event, or even those last

minute ‘let’s grab a quick drink’ conversations.

FINANCIAL HIGHLIGHTS

£872.3m

Revenue

2022: £799.6m

5.1p

Underlying Earnings/(loss)

pershare

2022: 4.3p

£34.4m

Net cash inflow

2022: £26.2m

£(20.7)m



Profit/(loss) before tax

2022: £163.4m

(1.5)p

Earnings/(loss) per share

2022: 21.7p

£35.5m

Underlying Profit/(loss)

before tax

2 02 2 : £ 27. 7m

1 Includes a £21.6 million net loss in respect of interest rate swap movements, a partial reversal of the £109.2 million net gain reported in

FY2022, and £31.2 million of charges in respect of the impairment of freehold and leasehold properties.

Our purpose

is to bringpeople together,

tocreate happy, memorable,

meaningful experiences.

We are a focused pub operator, with a culture tha t

places guests a tt the hear ot of everything we do.

Strategic report

Our purpose IFC

At a glance 2

Chair’s statement 3

Strategic review 5

Our business model 7

Our strategy 8

Strategy in action 10

Group operational and ﬁnancial review 12

Stakeholder engagement and

Section172(1)statement 16

Non-ﬁnancial and sustainability

informationstatement 21

ESG: Doing more to be proud of 23

Risk and risk management 40

Governance

Chair’s introduction 54

Board of Directors 56

Corporate Governance report 58

Directors’ Remuneration report 72

Directors’ report 87

Statement of Directors’ responsibilities 91

Financial statements

Independent Auditor’s report

to themembers of Marston’s PLC 92

Group income statement 100

Group statement of

comprehensiveincome 101

Group cash ﬂow statement 102

Group balance sheet 103

Group statement of changes in equity 105

Notes to the Group accounts 107

Company balance sheet 143

Company statement of

changes in equity 144

Notes to the Company accounts 145

Additional information

Alternative performance measures 154

Information for shareholders 158

Glossa ry 161

OUR STRATEGIC PRIORITIES

READ OUR INSIGHT REPORT

ANDTCFDREPORT ONLINE AT

WWW.MARSTONSPUBS.CO.UK

The Strategic report, outlined from the inside front cover to page 53 incorporates: Our purpose, At a glance, Chair’s statement, Strategic review,

Ourbusiness model, Our strategy, Strategy in action, Group operational and financial review, Stakeholder engagement and Section 172(1) statement,

Non-financial and sustainability information statement, ESG: Doing more to be proud of, and Risk and risk management.

By order of the Board:

Hayleigh Lupino, Chief Financial Officer

Alternative performance measures (APMs) are defined and reconciled into the statutory equivalent in the Additional Information section on page 154.

WE ARE GUEST

OBSESSED

WE RAISE

THEBAR

WE WILL

GROW

1Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Pubs to be proud of

At a glance

With circa 11,000 employees operating over 1,400 predominantly community pubs, Marston’s has the perfect pub, ready to give a

warm welcome, whatever the occasion. We are truly guest obsessed, andour guests are at the heart of every decision we make,

from developing our award-winning menus and evolving our drinks range, to our pub teams being focused on consistently

delivering a great experience.

Our core strategy and vision is delivering

‘Pubs to be proud of’. Our strategy is

underpinned by three core goals relating

to guest satisfaction, team engagement

and pub standards, which are measured

through clear KPIs and embedded in our

incentive schemes across the whole

organisation. We achieve our goals,

sustainable growth and value creation

through our focus on people,

experiencesand responsibility.

At Marston’s, people make pubs. We are a

people-powered business and we work hard

to attract, retain and develop the best talent;

from our hard-working pub teams and

entrepreneurial Pub Partners, who take pride

in ensuring that every guest feels valued, to

the people in our support functions (our Pub

Support Centre) who are focused on ensuring

our pubs have the tools, training and support

they need to deliver the best experiences.

We strive to provide the perfect setting for

every guest and every occasion, whether

that’s meeting friends to watch the football,

catching up with family, celebrating an

anniversary or simply popping in for a pint

orabite to eat. Our objective is to offer great

guest experiences in a quality environment,

supported by high-quality products and

stand-out service. We listen to our guests,

andtheir feedback helps ensure our

offerscontinue to meet their demands

andexpectations.

Through our ‘Doing more to be proud of’

initiative we focus on four core pillars:

Planet,People, Product and Policy. These

pillars resonate with and reflect our core

values and strategic priorities, and they are

where we believe we can make the biggest

impact and most meaningful contributions for

the benefit of all our stakeholders. Ourtargets

include reducing our carbon emissions, water

usage and tackling food waste, 5* EHO and

supporting our people, whilst having a

positiveimpact on the communities in

whichwe operate. See our Insight Report

formore information.

730

Partnership pubs

454

Managed pubs:

100 Signature

328 Community

26 Bars

230

Tenanted & Leased

People Experiences Responsibility

8.2

Your Voice employee

engagement score

766

Reputation score

93%

of our pubs 5* EHO

Over 300

Apprentices in

thebusiness

Best Neighbourhood

Pub menu and Best

Premium Pub menu

at the MIDAS 2023

Awards

388

EV chargers

acrossour estate,

with 5 super-fast

charging hubs saving

9 million kg of CO

2 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

A year of change

Chair’s statement

Financial year 2023 saw the first

restriction-free year of trading

since2019, and a clean year

hastaught us a great deal about

emerging consumer behaviour,

whichhas informed our future trading

strategies, as set out on page 10.

Inflationary pressures and interest

rates continued to be a factor and,

whilstthis presented challenges

toconsumers and businesses alike,

the demand to go out and socialise

atthe local pub remains strong.

As highlighted in the Strategic review that

follows we are committed to continuing

tosimplify the business and operating as

efficiently, and cost effectively, as possible.

New Chief Executive Officer

Despite the ongoing challenge of

macroeconomics, there is a real sense

ofmomentum across the business, and

thatthe simplification strategy has created

astrong platform from which we can

continue to grow. To this end, I am very

pleased to welcome Justin Platt to the

Boardas Chief Executive Officer, effective

from 10 January 2024. Justin has over

30years’ experience in hospitality and

consumer-facing businesses, having spent

the last 12 years at Merlin Entertainments,

most recently as Chief Strategy Officer.

Aswell as being a passionate advocate for

delivering customer experience, Justin has a

proven track record of delivering sustainable

business growth through strategic action and

is relentless in the pursuit of delivering results.

This complementary skillset equips

himperfectly to lead the business in the

nextphase of its development, supported

byafirst-class management team. The

management team are reporting directly

tome in the short interim period before

Justinjoins us.

I would also like to thank Andrew Andrea for

his valuable contribution and commitment

tothe Company, particularly in recent times,

which has been one of the most challenging

for our sector. He leaves the Company in

great shape with strong future potential, and

the Board and I wish him all the very best.

Our purpose, strategy and goals

In pursuit of ‘Pubs to be proud of’, we

operate a high-quality community pub

business, with minimal exposure to city

centres. Our three core pub goals are

focused on our guests, standards and

employee engagement, and we have

made excellent progress on all three

measures in the last year as set out on

page9.

Through our corporate goals we aspire

togrow the business with sales in excess of

£1billion and borrowings below £1 billion and,

asset out on page 10, we have made good

progress on these measures too.

In addition, we are focused on building

margins to ensure we are operating as

efficiently as possible, as well as becoming

more resilient and better placed to withstand

any future shocks. We have a medium-term

target of 200 basis points over the next three

years, and we look forward to reporting our

progress on this in financial year 2024

andbeyond.

During the year, our purpose to bring people

together to create happy, memorable,

meaningful experiences has continued to

beimportant. Our pubs are at the centre of

the communities they serve and, despite the

economic challenges faced by many of our

guests, our pubs remain an important place

for them to meet, socialise and enjoy a

memorable experience.

Trading and outlook

Total retail sales for the Group’s managed

and franchised pubs increased by 9.8%

compared to last year, with like-for-like retail

sales up 10.1%, reflecting the resilience of our

balanced estate, in terms of both geography

and format. We have proactively mitigated

cost and margin pressures by taking some

price, which has had minimal impact on

trading and guest sentiment. This reflects

thequality of our offer and range and is

augmented by tight cost control within

thebusiness.

The demand to go out and

socialise remains strong, and

the everyday treat of going

to the local pub remains core

to many people’s lives.

William Rucker

Chair

3Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Chair’s statement continued

Our Board

During the year, the Board reviewed its

effectiveness and worked together to

ensurethat the Group remains resilient

andwell-placed to continue its positive

trajectory. Matthew Roberts, who joined

theBoard in 2017, will step down at the AGM

on 23 January 2024. Following a rigorous

external search, I am also pleased to

announce the appointment of Rachel

Osborne, who will join the Board as an

independent Non-executive Director and

Chair of the Audit Committee from the same

date. I would like to thank Matthew, on

behalf of the Board, for his contribution.

Sustainability

Our environmental, social and governance

(ESG) strategy is embedded in – and supports

– our business strategy through our ‘Doing

more to be proud of’ (DM2BPO) initiative

andis driven through our four core pillars:

Planet, People, Product and Policy. The

People and Planet-positive practices

resonate and reflect our core values

andstrategic priorities, whilst being

underpinned by strong Policy – that is,

goodgovernance, risk management

processes and stewardship. This year our

DM2BPO team published our inaugural Insight

Report which sets out our aims, targets and

intentions, and shines a light on our focus

areas, positive impacts and where we

canimprove.

Shareholder returns

Of our three financial targets, our immediate

priority remains to reduce the overall level of

borrowing. In light of this, together with the

continued macroeconomic uncertainty, and

whilst recognising and taking into account

the importance of dividends to many of our

shareholders, the Board has decided that it

would not be appropriate to propose a

dividend in respect of financial year 2023.

The Board will actively review the timing of

the resumption of dividends during the next

financial year.

Looking to the future

Many of the economic and political

headwinds we faced in 2023 are showing

signs of easing. The combination of a less

challenging operating environment, a more

efficient and resilient business with a sense

of momentum and, under new leadership

with a first-class management team, is an

exciting mix. I am confident Marston’s has

the strength, positioning and management

expertise to deliver the sustainable business

growth that will drive value for our

shareholders.

4 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

A year of simplificaion

Strategic review

2023 Performance overview

2023 has been a year of focusing on the

coreestate and our strategic aims with

aclear objective to create a simplified,

high-quality, predominantly community

pubbusiness, with minimal exposure to city

centres where demand is more volatile.

Ourstrategy continues to be centred upon

delivering affordable pub experiences for

our guests in a quality environment, both

inside and out. The level of consumer

demand remains reassuring, and we have

continued to make positive progress on

guest satisfaction measures and standards

over the year, through our engaged and

focused pub teams.

We have traded well during the year,

outperforming the market, and have made

encouraging earnings progress on last year,

despite the challenging macroeconomic

environment. In addition, as described below,

we have taken cost actions to improve the

resilience of the business model and improve

profitability for the coming year.

The successful trial of our franchise-style

model in our food-led managed pubs, with

sales growth significantly exceeding that of

our broader food business, provides positive

momentum and additional options in

optimising our estate.

The performance supports the progress we

are making against our strategy and the

transformation which has been implemented

across the business during the last two years.

Our two primary corporate goals remain: to

reach two £1 billion financial targets over

time, namely to reduce the Group’s debt

(excluding IFRS 16 lease liabilities) to below

£1billion by 2026 and the achievement of

£1billion of sales. We continue to make

progress on both of these goals.

Trading

Revenue increased by 9.1% to £872.3 million

(2022: £799.6 million), total retail sales in the

Group’s managed and franchised pubs for

the 52-week period were +9.8% on last year,

and like-for-like retail sales for the year as a

whole were up 10.1% versus FY2022.

Both drink sales and food sales have

beenstrong, demonstrating the resilience

and appeal of our business. We continue to

have confidence that our pub strategy is

delivering positive momentum through the

challenging macroeconomic environment.

Underlying operating profit excluding

income from associates was £124.8 million

(2022: £115.4 million). Underlying operating

margins were effectively flat compared

tolast year, with a margin of 14.3% (2022:

14.4%); managing price increases, product

mix and efficiencies to preserve margins in a

period of high cost inflation. H1 margin was

10.6% and H2 margin was 17.6%.

Underlying operating profit including

incomefrom associates was £134.7 million

(2022: £118.7 million), an increase of 13.5%.

Underlying profit before tax was £35.5 million

(2022: £27.7 million). Statutory loss before

taxwas £(20.7) million (2022: profit of

£163.4million), reflecting the impact

ofnon-underlying items explained later.

Property and net assets

Net assets were £640.1 million (2022:

£648.1million), with net asset value stable

at£1.01 per share (2022: £1.02).

The carrying value of the estate remains

£2.1billion (2022: £2.1 billion). As a result of the

valuation and leasehold impairment review

there is an effective freehold impairment of

£24.3 million and a leasehold impairment of

£4.9 million. The valuation of non-core pubs

and an increase in discount rates have

contributed to the impairment. Importantly,

despite the valuation reflectinga challenging

macroeconomic environment, the value of

the core estate has been maintained.

During the year we generated £54.5 million of

non-core pub disposal proceeds (net of VAT),

which comprised £51.3 million proceeds net

of £1.1 million fees and £2.1 million lease

liabilities. The net proceeds were above

bookvalue.

Debt and financing

The vast majority of our borrowings are

long-dated and asset-backed, including the

securitisation debt of c.£611 million, which has

low interest rates in the current environment

and a payment structure that reduces debt.

The weighted average fixed interest rate

payable by the Group on its securitised debt

at 30 September 2023 was 5.1%. The Group

has confidence in the loan to value of its

debt, which is improving year on year and is

currently 68% for debt excluding IFRS 16 lease

liabilities, and 53% for the securitisation debt.

93% of our borrowings are hedged and

therefore not at risk from any changes in

interest rate movements that may occur

during the year.

Further detail is set out in the Group

operational and financial review on page 12.

Net debt, excluding IFRS 16 lease liabilities,

was £1,185 million, a reduction of £31 million

from last year (2022: £1,216 million). Total net

debt of £1,566 million (2022: £1,594 million)

includes IFRS 16 lease liabilities of £380

million (2022: £378 million).

Carlsberg Marston’s Brewing

Company(CMBC)

Income from associates was £9.9 million (2022:

£3.3 million), which is the Group’s share of the

statutory profit after tax generated by CMBC.

CMBC’s results show an improvement from last

year. Dividends from associates of £21.6million

were received (2022: £19.4 million), the prior

year dividend having primarily resulted from

one-off working capital movements. We

remain confident that we will continue to

receive future dividends from CMBC as its

trading continuesto improve.

Outlook

Costs

As highlighted in our October trading update,

as a consequence of pursuing theoperational

strategy of simplifying the business and driving

efficiencies, and following a review of the

business structure over the summer, we have

reduced head office headcount costs by

approximately £5million, generating savings

in FY2024 onwards.

The Group is highly confident of delivering

cost efficiencies of at least a further £3 million

in FY2024, principally from savings in energy

usage and pub labour costs as described in

the strategic review below, further improving

5Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Strategic review continued

operating profit margin. These cost

reductions are expected to translate into

higher pub operating profitability in future

years than was previously anticipated. This

cost efficiency delivery is not impacted by

the changes to National Minimum (Living)

Wage (NLW) rates.

As previously guided, we have fixed our

energy costs for FY2024 and have secured

asignificant proportion of our food and drink

costs for the year, providing us with a high

degree of confidence for the next

financialyear.

With regard to interest costs as described

above, our borrowings are largely long-dated

and asset-backed. 93% of our borrowings are

hedged and therefore not at risk of changes

in interest rate movements that may occur

during the year.

It is anticipated that the increases to the NLW

rates, which were announced in the recent

Autumn Statement will be c.£1 million for H2

ofFY2024 (c.£2 million annualised). We intend

to mitigate this increase through a variety of

actions including the acceleration of our cost

efficiency programme, together with price

increases where appropriate. Other Autumn

Statement measures announced, such as the

changes to business rates, are expected to

have minimal impact.

Current trading

The positive trading momentum from last

year has continued, with like-for-like sales in

our managed and franchised pubs since the

year end up 7.4% vs the same period last

year, with growth in both.

Bookings for the Christmas period are

promising and tracking ahead of last

year.Asalways, walk-in trade represents a

significant proportion of overall sales over the

period; however, the booking momentum

demonstrates that, despite economic

pressures, people still want to go out and

celebrate in a pub.

We remain cognisant of the current

macroeconomic environment, and the

resulting challenges this brings in respect of

cost inflation and the potential impact on

disposable income. However, pubs have

historically demonstrated their resilience as

an affordable treat and there is no discernible

evidence in our trading performance to

suggest that there has been a material

change to consumer behaviour.

Outlook

Looking forward, the combination of

ourstrategy and the principally community

location of our pub portfolio positions us

wellto withstand the challenging consumer

environment. In addition, the actions to

dispose of non-core pubs and introduce

ourfranchise-style model in our food-led

pubswill ensure we have a portfolio of

well-invested pubs which will continue to

deliver high-quality earnings and sustainable

future growth. An improving outlook in which

cost headwinds are abating, together with

the actions we have taken this year to drive

further efficiencies, leaves us confident that

Marston’s remains well-placed to continue to

outperform in the current macroeconomic

environment, grow revenue and profitability,

as well as deliver improved margin in the

yearahead.

Last year saw the first restriction-free

financial year of trading since 2019 and,

as such, it was the first ‘clean’ year in

which to understand the behaviour of

consumers following the pandemic.

We have learnt a great deal to inform

ourfuture trading strategies. It is clearer

than ever before that delivering a great

guest experience is key. Consumers are

increasingly demanding in this regard,

andour guests are prepared to spend

more money when they visit our pubs.

Redletter days are becoming more and

more important and, from an impulse

perspective, the Google search

‘Bestplace for’ is increasingly used

byconsumers, whether for a great pub

garden, televised sport, or dog friendliness.

The evolution of working from home is

stabilising and, in our view, this behavioural

change is best suited to community pub

businesses such as Marston’s with limited

exposure to city centres.

However, inflationary pressures have

continued this year, and the UK has seen

significant increases in interest rates, both

of which have presented challenges to

consumers and businesses alike. Despite

this, what is clear is that the demand to

go out and socialise and enjoy the

everyday treat of going to the local pub,

remains core to many people’s lives.

MARKET DYNAMICS

6 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

We recruit, reward, and retain

thebest people who are focused on

delivering great guest experiences

and have mature employee

engagement and feedback systems.

We aim to delight our guests

whatever the occasion, so they visit

our pubs time and time again.

Supporting our entrepreneurial

PubPartners to drivetheir businesses

forward and deliver on our shared

vision and goals.

We work closely with our trusted

suppliers, deliveringsuccess for

allthrough long-term, mutually

beneficial relationships.

Engaging with Government and

other regulatory and industry bodies

ensures the best outcomes forour

guests and our business.

We play an active role in our

communities, generating a positive

impact at a local level.

Using appropriate innovation

andtechnology toenhance the

guest experience and deliver

operational efficiency.

We are focused on being a

responsibleand sustainable business

by Doingmore to be proud of.

Revenues

Revenue increased by

9.1% to £872.3 million,

working towards our

goal of £1 billion sales

by2026.

Cash flow

Generating cash

supports the

achievement of our

borrowings target;

providing optionality on

the allocation of capital

in the future.

Reinvesting in our

pubestate

We are making

progresstowards a more

structured maintenance

cycle; ensuring we touch

more pubs at a greater

pace and maintain

performance at our

Pubsto be proud of.

Factors that influence long-term growth:

Risks

SEE PAGE 40

DM2BPO

SEE PAGE 23

Governance

SEE PAGE 54

RESPONSIBILITY

For our communities and society

See our new Insight Report at

www.marstonspubs.co.uk

For our shareholders

Stable NAV

per share

£1.01

Carrying value

ofthe estate

£2.1bn

Continued progress with debt reduction strategy

EXPERIENCES

For our guests

Reputation score of

766

PEOPLE

For our people

Employee engagement

score of

8.2

For our partners

Participation in

Partners Your Voice

survey

75%

Aggregate

participationrate

84%

Voted no.1 pub

companyin the Pub Code

Adjudicator Tenant/Tied

Partners survey for 2023

no.1

Where people make pubs

Our business model

Inputs What we do Outputs How we measure value creation

We are a pub company with a core estate of predominantly community pubs.

Operating in the mainstream market, we have apubforevery occasion. Our ‘brand

pub’ approach means we are well-hedged against changesin consumer trends and

differing levels of disposable income.

How we operate

Being guest obsessed and people-

powered means we invest in systems

which enable us to receive and react

at pace to feedback and to evolve our

estate and offer. Data-driven estate

reviews help to determine the best

format and operating model for our

pubs as well as to inform our future

disposal/acquisition strategy.

Ongoing simplification of the business

resulting in enhanced revenue

performance and cost reduction.

Evolving our menus and our drinks

range resulting in a simplified category

approach driving guest satisfaction

and efficiency.

100 Signature pubs

328 Community pubs

26 Bars

Pubs are categorised as Community

(ourentry point offer) or Signature

(ourpremium mainstream offer), with

the rightfood-led/wet-led mix for that

business and the guests they serve.

730 Community

230 Tenanted & Leased

Entrepreneurs operating under the

best agreement that drivestheir

business forward, benefiting both

themselves andMarston’s.

Market dynamics

SEE PAGE 6

We have outlined below our value-creation story – the characteristics of what we do that enables

us to create value for all our stakeholders.

MANAGED ESTATE PARTNERSHIPS

7Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

A clear guest-focused pub sraegy

Our strategy

Pubs

to be

proud of

CORE PUB GOALS

Loved by guests

All of our pubs to have

a Reputation score of

800ormore.

800+

Trusted

All of our pubs to be

5* EHO.

Responsible

business

Committed to being

aresponsible and

sustainable business.

Better than

the rest

Consistent market

outperformance.

Great place towork

Your Voice employee

engagement score of

8ormore.

Back to

a billion

Borrowings below £1billion by

2026, sales above £1 billion.

Sales culture

Never full,

fancy another

STRATEGIC PRIORITIES

WE ARE GUEST

OBSESSED

WE RAISE

THE BAR

WE WILL

GROW

CORE CORPORATE GOALS

FINANCIAL STRATEGY

DRIVINGSHAREHOLDER VALUE

Grow earnings

Progressive and sustainable dividend

Reduced debt

Debt: equity transfer

Increased returns

Increased NAV

FOOD HYGIENE RATING

0 1 2 3 4

Driving

efficiency

Margin improvement

ofat least 200 basis

points by 2026. This will

be reported on in the

next financial year.

8 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

766

731

2023

2022

92.9

83.6

77.4

2023

2022

2021

4.0

3.9

3.0

2023

2022

2021

872.3

799.6

401.7

2023

2022

2021

1,185.4

1,216

1,232

2023

2022

2021

45.9

55.5

61.0

2023

2022

2021

8.2

7.8

7.9

2023

2022

2021

8.6

7.0

12.3

2023

2022

2021

Focused vision, susainable business, clear goals

Our strategy continued

Our KPIs represent our principal metrics that we focus on in running our guest obsessed business.

Theymeasure our progress in raising the bar on our performance and in growing the business.

They also helpto determine how we are remunerated.

CORE PUB GOALS

Loved by guests

REM

All of our pubs to have a Reputation

scoreof800ormore

CORE CORPORATE GOALS

Better than the rest

To be no.1 pub company on Reputation.com

Trusted

All of our pubs to be 5* EHO – %

Responsible business

To remain in the FTSE4Good index

Back to a billion

REM

Total revenue – £m

Great place towork

REM

Your Voice employee engagement

scoreof8ormore

Never full, fancy

anothersalesculture

Spend per head vs LY – %

Why it’s important

Delivering great guest experiences every time

ensures our guests will visit our pubs time and

timeagain.

Why it’s important

We can see how we compare to our competitors

in the eyes of the guest.

Why it’s important

Ensuring all of our pubs meet these standards is an

integral part of our commitment to deliver our

vision of ‘Pubs to be proud of’.

Why it’s important

Creating a sustainable future for our business

benefits all of our stakeholders.

Why it’s important

Reaching our financial goals will stimulate growth

and value for all stakeholders.

Net debt (excluding lease liabilities) – £m

Free cash flow – £m

Why it’s important

As a ‘people-powered’ business, we want to

attract and retain the best people.

Why it’s important

A great pub is never full (we can always fit you in)

and great pub teams always ask our guests if they

would like something else.

2023

2nd

2022

3rd

Linked to remunerationREM

We are guest

obsessed

We raise

the bar

We will

grow

Key:

9Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Strategy in action

The effective use of capex remains key in

both maintaining the quality of the estate

and driving future growth. Underpinning

theestate repositioning described above

isa comprehensive capital programme

focused on deploying capital as efficiently

as possible and maximising returns. During

the year we completed 41 capital schemes

and we invested £4 million in our pub

gardens. The Group has £50–55 million of

capex investment earmarked for FY2024.

Sales above £1 billion

To complement our debt reduction strategy,

we will continue the progress made this year

on this corporate goal by driving sales and

gaining market share. There are five key

actions to achieve this:

• Clear pub goals: we have previously set

out the three core pub goals of high guest

satisfaction scores, engaged teams and

strong pub standards, and there is a clear

correlation between attainment of pub

goals and sales. We have made excellent

progress on all three measures this year

with an average Google star rating of

4.4and a Reputation score of 766, high

employee engagement with an

averagescore of 8.2 and aggregated

participation rate of 84%, and over 93% of

our managed and partnership pubs have

a 5* EHO rating.

Our vision and strategy is

unchanged. That is creating

‘Pubstobe proud of’, comprising

ahigh-quality, predominantly

community pub business, with

minimalexposure to city centres.

Operationally, we are focused on the core

pillars of driving guest satisfaction in a great

environment served by engaged and

motivated teams. This remains relevant

despite the macroeconomic challenges

continuing to impact the consumer.

A key driver of our strategy is simplification.

We have two core propositions: Community

is our entry point offer, and Signature is our

more premium mainstream offer for pubs

with a more affluent customer base. Whilst

food is clearly important in many of our

pubs, we are focused on ensuring that,

regardless of food mix, all our pubs are

regarded as a place to socialise and have

a drink in a welcoming environment. This

year we have also undertaken a detailed

estate review which enabled us to consider

a number of future operational strategies

from a rich and relevant data source,

fromtargeted capital expenditure to

opportunities linked to cluster planning,

including potential acquisitions or disposals.

The estate review has been one of the main

contributing factors to the increase in our

disposals guidance for FY2024.

• Driving a stronger sales culture:

ourinternal call-to-action on driving

salesis‘Never full, fancy another’

andthisis focused on ensuring that

wemaximise spend per visit and we

canalways accommodate a guest,

regardlessof how busy a pub is. During

the year, aspart of the garden investment

programme, we developed our order

andpay system further and have seen

continued increased usage. In addition,

inthe final quarter, we launched a drinks

incentive for hourly paid team members

which increased both drinks volumes and

spend per visit and this will be continued

into 2024. We also refined our booking

system to ensure an improved booking

experience for guests and our pub

teamsalike.

• Effective category management:

wecontinue to simplify our product

proposition to make our supply chain

asefficient as possible and make it

simplefor our teams to recommend

andserve quality drink or food, without

compromising guest choice. We have

launched a new drinks strategy based

onsimilar principles, which is delivering

enhanced margins in the form of upsell

opportunities, improved speed of service

and reduced stock holding requirements

and wastage.

Financially, we are focused on three key

priorities which we are confident will deliver

shareholder value in the medium to long

term by creating a sustainable business

thatis growing sales, earnings and cash

generation, whilst reducing debt levels

andincreasing returns.

Borrowings below £1 billion by 2026

This corporate goal is our main strategic

focus and where we see the greatest

shareholder value creation opportunity.

Ouractions to achieve this are twofold:

• Accelerated disposal of non-core assets:

in 2023 we generated £55 million of

disposal proceeds (net of VAT) from the

sale of non-core assets. Following a further

strategic review of the estate we are

targeting around £50 million in financial

year 2024. Thereafter we are anticipating

returning to a natural churn rate of

£10–15million of disposals per annum.

• Growth of free cash flow: inachieving

theborrowings target we areseeking to

maximise the recurring freecash flow

ofthe business which provides us with

optionality on the allocation of capital

infuture, including additional capital

expenditure and the reintroduction of

dividend payments. Given the hedged

debt profile of the business, outside

pubEBITDA, the future cash flows are

predictable with interest charges falling

as we pay down debt and the cessation

of pension payments targeted by 2025.

Focusing on our vision of ‘ Pubs to be proud of’

10 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Strategy in action continued

• Efficient digital and marketing strategy:

an effective marketing strategy

underpins increasing footfall and

ourfocus is on ensuring any marketing

expenditure is deployed efficiently with

the emphasis on maximising activity

returns. We have continued to evolve

and develop our digital strategy during

the year with improved pub websites

andthe introduction of card-linked

partnerships from which we anticipate

an uplift in 2024. In addition, our

targeteddoor-drop and digital

campaigns in 2023generated a

pleasingreturn on investment and we

shall continue this in the coming year.

• Development of Marston’s franchise style

agreements: the partnership model has

been extremely successful in our wet-led

pubs since it launched in 2009 and now

operates in c.730 pubs. Key to its success

is that the model ensures all stakeholders

are focused on maximising sales and the

‘owner driver’ mentality ofthe partner

has delivered consistently strong results.

The estate review and simplification of

the business has now enabled us to

launch the model into food-led pubs with

19 pubs now operating as food-led

partnerships. Theinitial results have been

very encouraging and we are targeting

50pubs (c.11% of our food-led pubs)

tobe operating under this model by the

end of 2024.

Improved business resilience:

margin improvement of at least 200

basis points in the medium term

Whilst driving the top line is key to delivering

growth, it is equally critical to ensure that

those sales are effectively converted into

profit. As reported, operating margins

effectively remained flat in 2023 following

ayear of significant inflation, and we are

one of the highest margin operators in the

sector. Regardless of this already strong

position, webelieve there are clear

opportunities to drive margins harder

inthenext 2–3 years, including:

• Pub support centre and culture: the

simplification of the business has enabled

us to refine our structure and we reduced

central payroll costs by £5 million, of

which the vast majority will be realised

in2024. In addition, we have internally

launched a focus on cost reduction and

‘Every Penny Counts’ which is aimed at

embedding a culture of reviewing any

expenditure across the business, no

matter how small.

• Pub labour: during the year, we rolled

outour labour scheduling system,

thefinal modules of which were

implemented in November 2023,

providing us with a system to ensure

weare deploying labour in our pubs

inthe most efficient way.

• Energy: the increased cost of energy

hasbeen widely reported and whilst

weare seeing an improvement in

energycosts for 2024, we do not

anticipate those costs falling back

topre-pandemic levels. The focus is

therefore to reduce underlying energy

usage through a combination of

investment and incentivisation and seek

opportunities through innovative power

purchasing. We have now completed

therollout of smart meters across the

managed and partnership estate and

integrated this into our reporting systems,

which enables us to monitor usage and

identify usage savings at a more

granularlevel.

People

Our people are the main underpin to

theperformance of our business – in short,

happy engaged teams deliver great guest

experiences, which deliver higher sales. Our

engagement scores have improved in the

year and survey participation is extremely

high – over 80% of our people have

participated in at least one of our monthly

surveys during the year.

Employee turnover has reduced during the

year and licensee stability remains an

important metric in ensuring we have the

right operator in every pub, first time.

From a recruitment perspective, we continue

to evolve the use of social media platforms

and media to attract talent. In addition,

weare looking at alternative talent pools,

and this year we have made excellent

progress on our Excel programme (formerly

Latitude)which supports ex-offenders with

employment and training opportunities. We

have recently launched the ‘Lock Inn’ in

collaboration with HMP Liverpool, which is a

training facility inside the prison that we have

converted to look and feel like a Marston’s

pub and will provide guaranteed job

opportunities for any ex-offenders that

complete the training course upon

theirrelease.

The development of internal talent is

alsokeyto long-term success. Our Aspire

programme which develops deputy

managers was successfully launched this

year and we plan to extend this in 2024 to

increase the pipeline of new licensees,

whether that be as a manager or Pub

Partner. We have a well-established

apprenticeship programme with

306apprentices within the business

ataretentionrate of over 75%.

11Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Strong earnings growth

Group operational and financial review

Financial highlights

Underlying

Total

2023 2022 2023 2022

Total revenue £872.3m £799.6m £872.3m £799.6m

Pub operating profit £124.8m £115.4m £90.2m £142.1m

Share of associate £9.9m £3.3m £9.9m £3.3m

Profit/(loss) before tax £35.5m £27.7m £(20.7)m

£163.4m

Net profit/(loss) £32.0m £27.5m £(9.3)m £137.2m

Earnings/(loss) per share 5.1p 4.3p (1.5)p 21.7p

Net cash inflow £34.4m £26.2m £34.4m £26.2m

NAV per share £1.01 £1.02

Underlying operating margin 14.3% 14.4%

1 Alternative performance measures (APMs) are defined and reconciled into the statutory equivalent in the

Additional information section on page 154.

2 Includes a £21.6 million net loss in respect of interest rate swap movements, a partial reversal of the

£109.2million net gain reported in FY2022, and £31.2 million of charges in respect of the impairment of

freehold and leasehold properties.

Revenue

Revenue increased by 9.1% to £872.3 million

(2022: £799.6 million), demonstrating the

resilience and appeal of our predominantly

community pub estate in the still-challenging

macroeconomic environment and with

momentum from strong drink and food sales.

Our guests still want to visit our pubs for an

affordable treat.

Like-for-like retail sales for the year as a

whole were up 10.1% versus FY2022, showing

positive momentum. Both drink sales and

food sales have been strong.

Total retail sales in the Group’s managed

and franchised pubs for the 52-week

periodincreased by 9.8% to £806.1 million

(2022: £734.1 million) and total outlet sales

increased by 10.0% to £832.8 million

(2022:£757.2 million).

Within our pub business we operated 230

pubs under the traditional tenanted and

leased model generating revenues of

£39.5million (2022: £42.4 million). It is still our

intention to convert the remainder of the

tenanted and leased estate to turnover

based models in the medium term.

Accommodation sales grew to £35.6 million

(2022: £33.1 million), benefitting from the

continuing demand for UK staycations.

Profit

Underlying operating profit excluding

income from associates was £124.8 million

(2022: £115.4 million). Underlying operating

margins were effectively flat compared to

last year, with a margin of 14.3% (2022:

14.4%); managing price increases, product

mix and efficiencies to preserve margins in

a period of high cost inflation. Due to the

seasonal nature of the Group’s business, the

majority of profit is typically earned in the

second half of the year. H1 margin was

10.6% and H2 margin was 17.6%.

Underlying EBITDA excluding income from

associates increased to £170.3 million

(2022:£159.6 million).

Underlying profit before tax increased

to£35.5 million (2022: £27.7 million) and

statutory loss before tax was £(20.7) million

(2022: profit of £163.4 million), reflecting

theimpact of non-underlying items.

The difference between underlying

profitbefore tax and profit before tax is

£56.2million of non-underlying items,

whichincludes a £21.6 million net loss in

respect ofinterest rate swap movements,

£31.2 of impairments to the freehold and

leaseholdproperty values, £2.9 million of

reorganisation, restructuring and relocation

costs and £0.5 million of pension past

servicecosts.

Like-for-like retail sales for the

year as a whole were up

10.1% versus FY2022, showing

positive momentum.

Hayleigh Lupino

Chief Financial Officer

12 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Total tax contribution in 2022/23

£m

VAT

£90.6m

Employee payroll taxes

£36.6m

Business rates

£27.1m

Employer payroll taxes

£15.2m

Machine Games Duty

£4.4m

Corporation tax

Other

£1.0m

£0.0m

£174.8m

Group operational and financial review continued

Interest

Our borrowing is largely long-dated and

asset-backed. The securitisation is in place

until 2035 which provides financing security

and high visibility of future cash flows; this is

of particular importance in an environment

where interest rates have been rising to curb

inflation. The securitisation is fully hedged

until 2035. Other lease related borrowings

are index linked, capped and collared at

1%–4%, providing protection against high

inflation. Of our £300 million bank facility,

£120 million is now hedged. Overall, we

are93% hedged, providing significant

protection against changes in interest rate

movements that may occur during the year.

The £60 million forward floating-to-fixed

interest rate swap, which was due to take

effect from April 2025, was brought forward

and started in October 2022.

Taxation

Underlying profit before tax was

£35.5million (2022: £27.7 million) upon

whichtheunderlying tax charge was

£3.5million (2022: £0.2 million). This gives

anunderlying tax rate of 9.9%. The effective

tax rate is lower than the standard rate of

corporation tax primarily due to the post-tax

share ofincome from associates, additional

deductions on which tax relief is available

including super-deductions, and an

adjustment to the deferred tax on property

calculation relating to the prior period.

The total tax credit is £11.4 million (2022:

charge of £26.2 million) on a total loss

before tax of £(20.7) million (2022: profit

of£163.4 million), with an effective tax rate

of 55.1%. The key drivers outlined above

increase the tax rate (credit) on the total

loss for the year, and there is a further

positive impact due to the additional tax

credits associated with PPE impairments,

and the rate difference between current

tax and deferred tax.

Non-underlying items

There is a net non-underlying charge of

£56.2 million before tax and £41.3 million

after tax.

The £56.2 million charge primarily relates to

a£21.6 million net loss in respect of interest

rate swap movements and a £31.2 million net

impairment to the freehold and leasehold

property values following the external estate

valuation of the Group’s effective freehold

properties and the impairment review of the

Group’s leasehold properties undertaken

during the year.

Other non-underlying items comprise

£2.9million of reorganisation, restructuring

and relocation costs, including the reduction

to head office costs detailed earlier, and

£0.5 million of pension past service costs.

The tax credit relating to these non-

underlying items is £14.9 million.

Earnings per share

Total earnings per share were (1.5) pence

lossper share (2022: 21.7 pence per share).

Underlying earnings per share were

5.1pence per share (2022: 4.3 pence

pershare).

Capital expenditure and disposals

Capital expenditure was £65.3 million in

theyear, including property acquisitions

of£0.4 million (2022: £70.1 million).

Weexpect that capital expenditure will

bearound £50–£55 million in 2024, as

wefocus on the most effective use of our

capital spend for our well-invested pubs.

During the year we generated £54.5 million of

non-core pub disposal proceeds (net of VAT),

which comprised £51.3 million proceeds net

of £1.1 million fees and £2.1 million lease

liabilities. The net proceeds were above

bookvalue.

We have concluded a further strategic

assessment of assets and in FY2024 we

expect to dispose of around £50 million

ofadditional non-core properties.

13Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Group operational and financial review continued

Debt and financing

The Group remained focused on cash

management during the year and

continued to prioritise cash preservation

whilst maintaining an appropriate level of

pub investment to ensure our pubs are well

positioned to deliver our strategy.

The Group generated a net cash inflow for

the period of £34.4 million including IFRS 16

(£29.3 million excluding IFRS 16). The net

cash inflow would have been £63.4 million

were it not for the working capital outflows

of £29.0 million, principally comprising

one-off cash flows arising from the final

settlement following our transitional services

agreement with CMBC. Future recurring

cash flows are expected to be in line with

our debt reduction plans, as part of which

we are targeting debt reduction of at least

£60 million in FY2024.

Net debt, excluding IFRS 16 lease liabilities,

was £1,185 million, a reduction of £31 million

from last year (2022: £1,216 million). Total net

debt of £1,566 million (2022: £1,594 million)

includes IFRS 16 lease liabilities of

£380million (2022: £378 million).

Property

The Group has an annual external valuation

of its properties and all pubs are inspected

on a rotational basis, with approximately

one third of the estate being inspected

each year and the remainder subject to a

desktop valuation. Christie & Co undertook

an external valuation in July 2023 and the

results have been reflected in the full

yearaccounts.

The carrying value of the estate remains

£2.1billion (2022: £2.1 billion). As a result of the

valuation and leasehold impairment review

there is an effective freehold impairment of

£24.3 million and a leasehold impairment of

£4.9 million. The valuation of non-core pubs

and an increase in discount rates have

contributed to the impairment. Importantly,

despite the valuation reflecting a challenging

macroeconomic environment, the value of

the core estate has been maintained.

Share of associate –

CarlsbergMarston’s

BrewingCompany (CMBC)

Included in our Group income statement,

onpage 100, is income from associates of

£9.9 million (2022: £3.3 million), which is the

Group’s share of the statutory profit after tax

generated by CMBC. CMBC’s results show

encouraging recovery from last year.

There was an operating cash inflow of

£141.2million in the year, ahead of last year

(2022: £134.0 million), principally reflecting

higher profits in the year. The operating

cash inflow would have been £170.2 million

were it not for the working capital outflows

of £29.0 million.

As set out in our Interim Results, we

successfully secured an amendment and

extension (‘A&E’) to our banking facility and

private placement to the end of January

2025. The revised £340 million facilities are

comprised of a £300 million Revolving Credit

Facility (the ‘RCF’) with the continued

support of all of our existing banks and with

two new banks keen to join the syndicate,

together with a restatement of our current

£40 million private placement. The RCF

replaces the Group’s existing £280 million

facility. The facility cost is variable: to be

determined by the level of leverage or

drawings from time to time alongside

changes in the SONIA rate, together

withissue costs. As previously reported,

£120million of the facility is hedged.

The Group also benefits from dividends

received from CMBC, as shown in our

Groupcash flow statement. Dividends from

associates of £21.6 million were received

(2022: £19.4 million), the prior year dividend

having primarily resulted from one-off

working capital movements. Dividends in

respect of CMBC’s calendar financial year

are paid in September in year (for January

– June) and March the following year (for

July – December). The dividends are

generated from CMBC’s operating cash

flows adjusted for working capital and

othermovements.

We remain confident we will continue to

receive future dividends from CMBC as its

trading continues to improve and produce

positive results.

Pensions

The balance on our final salary scheme was

a £12.9 million surplus at 30 September 2023

(2022: £15.1 million surplus). This change has

primarily been driven by the increase in

thediscount rate assumption, from 5.2% in

October 2022 to 5.6% in October 2023, and

a fall in asset values. The net annual cash

contribution is c.£6m and is only expected

to continue for the short term. The results of

the next triennial valuation are expected in

early 2024.

14 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Group operational and financial review continued

During the period and prior to the A&E, we

secured the covenant amendments that

werequired, as reported in our 2022

financial results, again demonstrating the

good relationship and support we continue

to have with our banking group and private

placement provider. No further covenant

amendments have been required.

The Group anticipates commencing formal

discussions with the RCF banks and private

placement holder in early 2024 in order to

secure the refinancing of these facilities to

beyond January 2025. Whilst there is no

guarantee, based on the successful A&E to

the RCF and private placement during the

period, and the positive conversations held

to date, the Directors are confident that

they would expect to be able to secure

refinancing onsimilar terms.

The vast majority of our borrowings are

long-dated and asset-backed, including

the securitisation debt of c.£611 million,

which has low interest rates in the current

environment and a payment structure that

reduces debt. The weighted average fixed

interest rate payable by the Group on its

securitised debt at 30 September 2023 was

5.1%. The Group has confidence in the loan

to value of its debt, which is improving year

on year and is currently 68% for debt

excluding IFRS 16 lease liabilities and 53%

forthe securitisation debt.

The Group’s financing, providing an

appropriate level of flexibility and liquidity

for the medium term, comprises:

• £300 million bank facility to January 2025

– at the year end £229 million was drawn

providing headroom of £71 million and

non-securitised cash balances of

£10million.

• £40 million private placement in place

until January 2025.

• Seasonal overdraft of £5-£20 million,

depending on dates – which was not

used at the period end.

• Long-term securitisation debt of

approximately £611 million – at the year

end £10 million of the£120 million

securitisation liquidity facility had

beenutilised, which was repaid in

October 2023.

• Long-term other lease related borrowings

of £338 million.

• £380 million of IFRS 16 leases.

The securitisation is fully hedged to 2035.

Other lease related borrowings are index-

linked capped and collared at 1% and 4%.

There are £120 million of floating-to-fixed

interest rate swaps against the bank facility:

£60 million is fixed at 4.03% until 2031 and

£60 million is now fixed at 3.45% until 2029.

In summary, we have adequate cash

headroom in our bank facility to provide

operational liquidity. Importantly, c.93%

ofour medium to long-term financing is

hedged thereby minimising any exposure

tointerest rate increases that may arise over

the next few years.

Going concern

In the Group’s base case forecast, no

covenants are forecast to be breached

within the next 12 months and the Group

has adequate liquidity throughout the

going concern period.

In a severe but plausible downside scenario

only, the Group would be required to amend

solely the Interest Cover covenant to our

banking and private placement facilities

inthe outer quarters of the going concern

period. Given our experiences to date

wewould be very confident of securing

thiswhere necessary. This has been

disclosedas a material uncertainty in the

financial statements. Further information

ison page 108.

15Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Engaging regularly with our sakeholders

Stakeholder engagement and Section 172(1) statement

Section 172 statement

Under Section 172(1) of the Companies Act

2006 (‘Section 172(1)’) the Directors are

required to act in a way that they consider,

in good faith, would most likely promote the

success of the Company for the benefit of its

members as a whole, while also considering

the likely consequences of any decisions

over the long term and the needs and

interests of a broad range of stakeholders.

The UK Corporate Governance Code (2018)

(‘the 2018 Code’) also requires the Board to

understand the views of the Company’s key

stakeholders and to periodically review

stakeholder engagement mechanisms to

ensure they are, and remain, effective.

Stakeholder engagement

We describe below how we have engaged

with, and considered the interests and views

of, our key stakeholders in pursuit of our

vision: Pubs to be proud of. The principles

underpinning stakeholder engagement

and promoting the success of the Company

as set out in Section 172(1) are not only

board-level considerations, but they are

also embedded in our business. Further

examples appear throughout this report

and in our Insight Report.

Our stakeholders

Our main stakeholder groups are set out below, with an explanation of why they are key to our business and how our Directors engage

with them. We use different methods of engagement to listen to, and help us to better understand, the priorities and needs of each

stakeholder group.

People – People make pubs, and our business is

built on the strength of our people. They rely on us

to provide a safe place to work and development

opportunities to realise their potential. Through our

SAYE scheme, many employees are also

shareholders.

Regulators and industry bodies

– We strive for high standards of

business ethics and corporate

governance and working with

those that govern and regulate

us helps us to achieve this.

Investors – Our shareholders, bondholders

andbanking group provide essential sources of

capital to support our business objectives. In turn,

they expect us to manage their investment in our

Company responsibly.

Pub Partners and tenants

– Our Pub Partners rely on

us to provide competitive

operating agreements

and training and support

to enable them to run their

own businesses. We rely on

them to play their part in

operating Pubs to be

proud of.

Communities and the environment

– Thecommunities in which we operate,

and the wider public, expect us to act in

a responsible manner and minimise any

adverse impact on the environment.

Suppliers – We rely on our suppliers to produce

quality products and to provide essential services

tooperate our business. They rely on us to operate

responsibly and generate revenue.

Guests – Our guests are the reason we exist. It is

essential that we have systems in place which

enable us to receive and react at pace to their

changing needs and preferences.

16 Marston’s PLC Annual Report and Accounts 2023

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Stakeholder engagement and Section 172(1) statement continued

The employees at the meeting represented

adiverse cross section of our people from

our pub teams and pub managers to a

range of support roles at our pub support

centre and they were chosen from a shortlist

of nominations compiled by our HR Business

Partners. At a Board meeting in early 2024,

our DNED and the Head of Engagement

willpresent the key outputs and suggested

actions to the Board of Directors and the

Executive Committee, with any agreed

actions to be reported in next year’s

annualreport.

Pub visits

One of the objectives of the forward Board

agenda is to consider opportunities for the

Board and the Executive Committee to meet

and directly engage with our employees or

Pub Partners in person. We achieve this by

having at least two, two-day meetings each

year comprising one ‘day in trade’ and one

day reserved for the Board meeting, but

heldin function rooms located in one of our

pubs. As well as giving the Board a deeper

understanding of the business and the

people who power it, our employees and Pub

Partners have the opportunity to engage with

the Directors in an informal setting. We rotate

the location of these meetings each year

and, this year, the Board visited a cross section

of our pubs in Yorkshire and Derbyshire.

Our people

Due to the regular contact they have

withother stakeholder groups, such as

ourguests and suppliers, our people often

have first-hand knowledge of how we are

performing and how we are perceived. The

Board therefore recognises that harnessing

employee engagement could help refine

their thinking, define strategy and culture,

and deliver long-term sustainable success.

In return, our people get a real sense of

purpose from meeting with our Board and

senior management. This year, the Board

has engaged with, and considered the

views of, our people in the following ways:

Monthly engagement surveys

Our anonymous engagement survey

‘YourVoice’ is pulsed monthly and with the

corresponding engagement KPI, outputs

andactions from employee feedback, has

helped to embed a culture of listening and

engagement at Marston’s. This year, wehave

a combined engagement score of8.2 and

an aggregate participation rate of 84%.

YourVoice also provides line managers with

apersonal dashboard and curated insights

enabling them to understand what themes

orissues are important to their team, as well

as understanding company-wide trends.

Athematic report is produced quarterly by

our Head of Engagement to the Executive

Committee, providing management with

oversight of trends across the whole

organisation. This year, our people told us

thatour main strengths are: goal setting, the

supportive nature of line managers and the

quality of work at Marston’s.

Presentations on performance and strategy

Where possible, the CEO and/or the

CFOpresent our trading results to our pub

support centre employees in person, with a

recording available for everyone else. Our

employees tell us through Your Voice that

they like to hear from the Directors on how

the business is doing and having the

opportunity to ask questions is really

appreciated.

Whistleblowing

During the year, the Audit Committee

received an update on any issues reported

through Speak Up, our whistleblowing

system. More details aresetout on page 71.

Diversity and inclusion

We are committed to promoting an inclusive

culture for our people, and our Pub Partners,

and we do this through our ‘Come as you

are’ Diversity and Inclusion strategy. More

details can be found on page 24 and in our

Insight Report, available on our website:

www.marstonspubs.co.uk.

Link to strategy

Areas identified for improvement included

additional support for health and wellbeing.

To address this, line managers have a

separate health and wellbeing dashboard

within Your Voice, with each health and

wellbeing ‘driver’ seeking to measure how

supported people feel to stay mentally,

socially and physically healthy at Marston’s.

Our employee-led network groups have also

launched a suite of new wellbeing initiatives

including: training for line managers in mental

health and resilience, free independent

advice on financial health and improved

employee benefits including discounted gym

membership and ‘Meal Deals’ whilst on shift.

Workforce engagement

This year we reviewed our board-level

engagement to ensure effective integration

with Your Voice as we considered that

board-level workforce engagement works

best when it complements and supports

existing engagement mechanisms. Bridget

Lea is, and remains, our designated Non-

executive Director (DNED) responsible for

workforce engagement and, as our

workforce told us, they really enjoyed having

the opportunity to voice their opinion at a

meeting chaired by the DNED. However, as

part of the review it was determined that

wecould improve how we leveraged the

data we captured through Your Voice to

determine the agenda of these meetings

toensure proper focus. This year the main

topics discussed at the meeting were: mental

wellbeing, our ways of working and how they

fit with what our people consider important

in life, and valuing the opinion of our

workforce, and how each of these

prioritiescan be improved across the

wholeof the business.

17Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Stakeholder engagement and Section 172(1) statement continued

Our guests

Being guest obsessed is one of our main

priorities and we engage with our guests to

ensure our formats, offers and range of food

and drink remain relevant to them.

We partner with Reputation

Our guest experience and online reputation

management platform provides a ‘one stop

shop’ for all guest feedback, combining all

social media platforms, our internal guest

satisfaction survey (Help Raise the Bar) and

any direct communications we receive from

guests. This platform is used by managed and

Pub Partner sites, providing a streamlined and

efficient way of managing and engaging

with our guests irrespective of format. It also

enables us to check, and where necessary to

react to, guest-facing business decisions in

real time and analyse key themes and trends

in the feedback received and put action

plans in place to address any issues that might

arise. This year, Reputation told us that the key

things our guests wanted us to focus on was

the quality of our food and drink, our speed

of service and the atmosphere in our pubs.

Our Pub Partners

Whilst our Pub Partners are not directly

employed by us, they are an important

stakeholder group and a huge part of

thepeople that power our pubs. Like our

employees, they also have regular touch

points with other stakeholder groups, such

as our guests and our employees and a

two-way dialogue is important to harness

this for combined benefit. Some examples

appear below:

Engagement surveys

Since February 2021, our Pub Partners

havebeen encouraged to complete their

own 6-monthly Your Voice survey giving

them an opportunity to anonymously

feedback on all aspects of working with

Marston’s. The last survey was completed in

April 2023 which saw improvements; in terms

of both engagement levels and outcomes.

Currently the aggregate participation rate

for our Pub Partners is 75% and according

tothem the main strengths of working with

Marston’s were: the meaningful nature of

thework and the feedback and insight

theyget from Marston’s, enabling them

tounderstand how their business is doing.

Theresults of the Pub Partner survey are

included in the quarterly reports to the

Executive Committee.

Panel surveys

We use these surveys to directly panel

ortest specific points with a cross section

ofour guests. The survey is completed

byarepresentative panel of guests, from

eachofour formats, and we can amend

that survey to ask specific questions,

suchascostof living, food and drink

preferences.We can aim toreceive

around700 responses within 24hours.

Link to strategy

Our suppliers

During the year the Board approved

andreceived updates on key contract

renegotiations and strategy with key

suppliers,including energy, investment in

ourIT infrastructure and technology and

ourdrinks distribution arrangement with

Carlsberg Marston’s Brewing Company.

Indoing so, the Board balanced the benefits

of maintaining trusted partnerships with key

suppliers alongside the need to extract value

for money for our shareholders and good

service for our guests, Pub Partners and

tenants. Further information on how we

engage with our supply chain, on important

topics such as ethical sourcing, can be

foundin our Insight Report.

Link to strategy

Reputation

We also provide our Pub Partners

withtraining and support on the use of

Reputation.com and how to maximise guest

satisfaction and respond to the needs of

their guests. More detail on the Reputation

platform is provided below.

Training and development

Every Pub Partner receives complimentary

access to Marston’s Campus, our training

and development platform, which includes

a number of e-learning courses, webinars

and help with apprenticeships. We also

support with training record cards for the Pub

Partners’ team members, providing support

for EHO and licencing compliance, and

support in gaining the relevant qualification

to apply for a personal licence.

Pub visits

As detailed on page 17, the pub visits

byourBoard include a number of our Pub

Partner sites, providing a unique opportunity

for the Board to engage directly with Pub

Partners about what works well and what

could be improved.

Link to strategy

18 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Stakeholder engagement and Section 172(1) statement continued

All shareholders have an opportunity to ask

questions or represent their views formally to

the Board at the AGM, or with the Executive

Committee after the meeting. The interests of

investors were considered as part of the

Board’s decisions throughout the year.

This year, we engaged with our investors

onanumber of different subjects, including

the Company’s performance, our progress

against our key corporate goals and

ESGmatters.

The CFO and our Director of Treasury are

responsible for managing the relationships

with our banks and bondholders and the

management of the Group’s financing

activities. The CFO and our banking advisers

provide regular reports to the Board and

theAudit Committee on these activities

including the Company’s headroom and

liquidity, and future financing plans. The CFO

and her team also engage directly with our

banking group by providing presentations on

our strategy and financial performance.

Link to strategy

Communities and

theenvironment

Our Insight Report includes a number of

keytargets where we believe we can make

meaningful contributions for the benefit of all

our stakeholders, including the community

and the environment. The four core pillars

ofaction are Planet, People, Product and

Policy, and these pillars resonate with,

andreflect, our core values and strategic

priorities. The ways in which we engage with

stakeholders in these key areas, and how we

consider and measure our progress, are set

out in more detail in the Insight Report and

on page 25.

Link to strategy

Our investors

Engagement with our shareholders and

investor community is essential to ensure

that we attract and retain long-term

investors, who are supportive of our strategy.

We strive to ensure that we provide fair,

balanced and understandable information

to ensure that all our investors understand

our strategy and vision and have clarity

over our financial and non-financial

performance. An analysis of investor by

type can be found on page 159.

The Government

andregulators

The Company is subject to a wide range

oflaws and regulations, and we seek to

co-operate and engage constructively

withall regulatory authorities. As a

responsible business, we continue to work

ata business level with Environmental Health,

Public Health England, Public Health Wales,

the Office of Health Improvement and

Disparities and Drinkaware. The Pubs Code

regulates the relationship between all pub

companies owning 500 or more tied pubs

and we engage directly with the Pubs

CodeAdjudicator on these matters. The

Audit Committee has oversight of our tied

operations through bi-annual reports from

our Code Compliance Officer, in line with

our statutory duties. We also work with our

peers at both a policy and a local level

through UK Hospitality.

Link to strategy

The Board engages in a variety of ways,

including:

• Regular calls, correspondence and

meetings between shareholders and

theChair, the CEO and CFO, covering

avariety of issues including governance

and remuneration matters, strategy

andperformance.

• Major shareholders are invited to the

annual and half year results

presentations.

• Regular communication with institutional

investors by the Company Secretary and

senior management, particularly on

Environmental, Social and Governance

(ESG) ESGmatters.

• We publish regular financial and trading

updates via RNS announcements.

• Regular communication with retail

investors by the Company Secretarial

team.

The Board also receives regular information

on investor sentiment from several sources,

notably analyst reports, presentations and

reports from the Company’s brokers,

feedback on market reaction following

annual and half year results announcements

and reports from the Chair, CEO and CFO.

An important way in which we engage with

our shareholders is at the annual general

meeting (AGM).

19Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Stakeholder engagement and Section 172(1) statement continued

Section 172(1) in action

The Board is mindful that sometimes

decisions must be made whilst weighing up

different, and often competing, priorities.

Whilst not all stakeholders’ interests fall for

consideration in every Board decision,

whena relevant matter is reviewed by the

Board, the below shows how the Directors

considerSection 172(1) in their decision-

making process.

A key matter considered by the Board

during the year was the impact of rising

energy prices and cost inflation, particularly

on food and other consumables. The Board

considered what effect this could have on

our investors, Pub Partners and suppliers if

these macroeconomic challenges led to

adecrease in consumer demand, and the

impact that the mitigating actions taken by

the Board could have on the Company’s

guests, Pub Partners and employees.

Those decisions were monitored closely

using the Company’s well established

stakeholder mechanisms including

thoseforemployee, guest and

PubPartnerfeedback.

There were also similar considerations made

by the Board in relation to the simplification

of the business and its trading formats as

described in more detail on page 10.

The Board considered the impact

ofthisdecision on the Company’s investors

particularly in relation to long-term value

creation, whilst balancing and being

mindful of the impact on employees and

how the decision could be implemented

ina way that was as fair and equitable

aspossible.

Train Inform Engage Link to strategy Discussion Decision & action Review

The Board and

operational

directors receive

regular training on

directors’ duties,

business ethics

andSection 172(1).

High standards

ofcorporate

governance ensure

our Board is both

diverse and

experienced.

Board papers

frommanagement

highlight any

relevant Section

172(1) considerations

for the Board to

consider.

The Board

regularlyengages

with different

stakeholder groups

to understand their

interests and views.

The Company’s

culture, values

andgoals are

stakeholder-centric.

This helps ensure

consideration

isgiven to the

interests of those

stakeholders and

the impact of Board

decisions on

long-term value

creation is tracked,

measured and

reported.

Section 172(1)

matters are

considered as

partof the Board’s

discussions on key

strategic and

operational

decisions and how

those decisions

willaffect relevant

stakeholder groups

and performance.

Once a decision

ismade, outcomes

are, where

appropriate,

communicated to

stakeholders by

using one of the

mechanisms, as

described on

pages 16 to 19.

Depending on

theoutcome of

decisions, feedback

is gathered and

may be subject to

further discussion

bythe Board as a

whole.

20 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Non-financial and sustainability information statement

The Company aims to comply with the non-financial reporting requirements contained in sections 414CA and

414CB of the Companies Act 2006. The information set out below, together with signposts to other relevant sections

of the Annual Report and Accounts, Insight Report and our website, is intended to assist stakeholders in

understanding the Company’s position and approach to the following key non-financial matters.

Reporting

requirement Our policies, standards and guidance that govern our approach Where to find it

Sustainability

• Our ESG initiative ‘Doing more to be proud of’

• Taskforce on Climate-related Financial Disclosures (TCFD) report

• Our Food Supplier Charter which, amongst other things, sets out our expected sourcing policies and standards

• Environmental Policy

PAGE 23 AND OUR INSIGHT REPORT

PAGE 26

INSIGHT REPORT

Our people

• Marston’s policies are shared with all our employees via the digital ‘People Handbook’, which can be accessed from

either a work or personal device. These policies include:

− Health & Safety Policy and Food Safety Policy

− Our ‘Speak Up’ system and Whistleblowing Policy

− Equality, Diversity & Inclusion Policy

− Our Corporate Hospitality & Gift Policy

− Family Leave Policy

• We publish our annual Gender Pay Gap report on our website

PAGE 16 STAKEHOLDER ENGAGEMENT

PAGE 67 AUDIT COMMITTEE REPORT

PAGE 64 D&I AND OUR INSIGHT REPORT

PAGE 71

INSIGHT REPORT

WWW.MARSTONSPUBS.CO.UK/RESPONSIBILITY

Human rights

• Marston’s is committed to respecting and upholding human rights within our business and our supply chain. This is outlined in

our Human Rights Policy and Food Supplier Charter

• Our Modern Slavery Statement explains Marston’s business, its supply chain and the risks, and mitigations, of modern slavery.

Itincludes the use of SEDEX to gain access to ethical information provided online by our suppliers

• Our Food Supplier Charter which, amongst other things, sets out our expected ethical standards, including the eradication of

unethical business practices and human rights abuses, such as modern slavery and child labour

PAGE 25

PAGE 89

WWW.MARSTONSPUBS.CO.UK/RESPONSIBILITY

INSIGHT REPORT

OUR POLICIES, INSIGHT REPORT,

TCFDREPORTANDFOOD SUPPLIER

CHARTERCANBEFOUND ONOUR WEBSITE

WWW.MARSTONSPUBS.CO.UK

21Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Non-financial and sustainability information statement continued

Reporting

requirement Our policies, standards and guidance that govern our approach Where to find it

Social matters

• Our ESG initiative ‘Doing more to be proud of’

• The Pubs Code regulates the relationship between pub companies owning 500 or more tied pubs in England and Wales

and their tenants

• Our Food Supplier Charter

• Our food information system is used to formulate our dishes, identify allergens and communicate food constituents

toourguests

• Our Procurement Policy allows us to ensure that any goods and services acquired are the result of transparent and

objective decision-making, deliver total life cost-efficiencies and manage risk within our extended supply network

PAGE 23 AND OUR INSIGHT REPORT

OUR STATEMENT CAN BE FOUND AT

WWW.MARSTONSPUBS.CO.UK AND

INFORMATION FROM THE PUBS CODE

ADJUDICATOR CAN BE FOUND AT

WWW.GOV.UK

INSIGHT REPORT

Anti-bribery and

corruption

• Our Anti-bribery and Corruption Policy and Anti Money Laundering Policy

• Our Food Supplier Charter

• Our Procurement Policy

• Our Fraud Policy

INSIGHT REPORT

Privacy and Data

• Data Protection Policy

• Data Privacy notices

• Data Security Committee reviews of compliance challenges, breaches, and incident response planning

OUR PRIVACY NOTICES AND

STATEMENTCAN BE FOUND AT

WWW.MARSTONSPUBS.CO.UK

Due diligence

Due diligence activities during the year have included:

• Review and publication of our revised Food Supplier Charter

• Pubs Code compliance review by the Audit Committee

• Review of corporate policies and developing a People Handbook electronically available to all employees

• A programme of pub safety and food supplier audits

• Review of our ‘Speak Up’ Policy and awareness raising and, development of a confidential online portal to make ‘Speak Up’

reports securely

• Data mapping and process recording

INSIGHT REPORT

PAGE 67 AUDIT COMMITTEE REPORT

Other matters

• Business model – what we do, our key relationships and the value that is created

• KPIs – in addition to financial metrics, we include other non-financial key performance indicators, such as the Your Voice

engagement score, 5* EHO and Reputation score of 800 or more

• The principal risks detailed in this report include non-financial risks

• The function and remit of the Risk & Compliance Committee explained in this report

PAGE 7

PAGE 9

PAGE 43

PAGE 52

22 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Responsible and susainable business

ESG: Doing more to be proud of

We remain committed to being a

responsible and sustainable business

by adopting a People and Planet-

positive approach for our People,

PubPartners, guests, and the

communities we serve.

The principal way in which we do this is

through our ‘Doing more to be proud of’

(DM2BPO) initiative and our focus on four

core pillars: Planet, People, Product and

Policy. Each of the four pillars connects to

the core of what we do and where we

believe we can make the biggest impact.

The People and Planet-positive practices,

and targets championed and implemented

by senior leaders responsible for each pillar,

reflect our core values and strategic

priorities, whilst being underpinned by strong

policy – that is, good governance, risk

management processes and stewardship.

Many aspects of what we refer to today as

‘Doing more to be proud of’ have long been

part of our business and the way in which we

operate. Marston’s strategy ensures we deliver

Pubs to be proud of, but we believe that our

pubs and business model will only endure if

they reflect the needs of all our stakeholders

and are operated in a sustainable and

responsible manner, and this belief is the

beating heart of DM2BPO.

To help ensure proper stewardship and

accountability, our Board and Executive

Committee retain oversight of our ESG

strategy and ultimate responsibility for

attainment of our targets and climate-

related risks and opportunities. However,

theDM2BPO taskforce and the steering

committees they lead, are the engine room

of execution. These cross-functional teams

have the expertise, networks and authority

to drive the activities that support and help

ensure that the strategy is fully integrated

and just another part of ‘the way we

dothings round here’. Our taskforce is

supported by steering committees for each

of the four pillars, along with our specialist

groups for each of the areas of focus, from

the impact of climate change from our TCFD

and environmental working group, to our

inclusion strategy from our D&I taskforce.

This year our DM2BPO team are proud to

present our inaugural Insight Report which is a

statement of our aims, targets and intentions,

and shines a light on our focus areas, case

studies and where we think we can improve.

As well as monitoring and measuring

performance against our targets, looking

forward, it is important to us that we have

mechanisms in place to evaluate the

effectiveness of our initiatives (or potential

future initiatives) both in terms of the impact

on Marston’s and on our key stakeholders. In

the medium term, we are working on ways

tofurther embed DM2BPO into our business

strategy and operations, by using our existing

feedback loops for stakeholder engagement

and leveraging these to ensure our strategy

and focus areas remain relevant and we are

prioritising the right things.

Whilst we would invite you to read the

Insight Report in full, we have included a

summary of our key targets, actions and

outputs on the following pages.

ESG GOVERNANCE STRUCTURE

Board of Directors

Ultimate oversight of our environmental

andsocial impacts and strategy and

monitoring ESG-related risks

General Counsel &

CompanySecretary

Chair of the DM2BPO Taskforce ensuring

Executive Committee-level stewardship

Steering committees

Subject matter experts responsible

forensuring initiatives are just part of

‘thewaywe do things round here’

Supporting groups

Specialist groups for specific areas of focus,

including the TCFD and Environmental

working groups, theD&ITaskforce and

supporting employee-led networks

‘Doing more to be proud of’

taskforce

Senior leaders responsible for shaping the

strategy and setting and monitoring our

targets and commitments

READ OUR INSIGHT REPORT ONLINE AT

WWW.MARSTONSPUBS.CO.UK

CORE PILLARS OF OUR ‘DOING MORE TO BE PROUD OF’ INITIATIVE

23Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

ESG: Doing more to be proud of continued

PLANET PEOPLE

Key goals

1. Carbon Neutral by 2030 (Scope 1 & 2)

andby 2040 (Scope 3).

2. To consider and where possible procure

orpromote energy from renewable or self-

generated sources.

3. To reduce the volume of water we

consume acrossour estate every year.

4. To work with our supply chain to achieve

and maintain zero waste to landfill.

5. To reach an overall recycling rate in our

business of at least 75%.

6. Increase reclaimed rates of cooking oil

toat least 60% compared to what we

purchase/consume across our estate.

Key goals

7. Our people to rate us 8 or more as part

ofour monthly engagement surveys, as

measured by Your Voice.

8. Utilise as much of the apprenticeship levy

each month to maximise investment in our

people and partners.

9. Striving towards being an inclusive employer

that attracts and appeals to diverse,

disadvantaged, and vulnerable groups of

people and that nurtures and develops

people joining from all backgrounds.

10. Health and wellbeing and diversity and

inclusion to be measured and for scores to

improve and for employees’ comments to

help inform and develop our agenda.

Our progress

• Scope 1 & 2 emissions reductions of 3%

compared to last financial year.

• This year, we saved 302,575 pints of

water per day.

• 99.34% of our waste is directed away

from land fill sites, which classifies as zero

waste to land fill.

• 58.77% of the total oil purchased was

recycled with Olleco to be repurposed

as biodiesel, instead of mineral diesel.

Our progress

• Current employee engagement score

of 8.2 and aggregate participation rates

of 84%.

• Average of 80% of levy spend per

month, with over 300 apprenticeships in

learning across the business.

• This year we have introduced a

separate health and wellbeing

dashboard within Your Voice, with each

health and wellbeing ‘driver’ seeking to

measure how supported people feel to

stay mentally, socially and physically

healthy at Marston’s. After a full year, we

will report on progress we have made.

Main actions this year

• Established our baseline carbon

emissions in partnership with the Zero

Carbon Forum.

• Worked with suppliers to turn waste into

resource and reduce emissions.

• Energy Audits to identify inefficiencies.

• Established a direct partnership with

Olleco to turn our waste cooking oil into

a valuable resource.

Main actions this year

• Our Aspire programme which develops

deputy managers was successfully

launched and we plan to extend this

further in 2024 to increase the pipeline

of new licensees.

• Continued development of our Excel

programme to continue to support

prison leavers with skills and

employment options, including the

opening of ‘The Lock Inn’, our training

kitchen at HMP Liverpool.

Responsibility: Director of Property

The planet being our most fragile stakeholder, we want to operate our business and

supply chain more efficiently to reduce our energy consumption, emissions and use

ofprecious natural resources like water. We also want to reduce our impact on the

environment by reducing or repurposing our waste and encouraging our suppliers

todo the same.

We are continually developing our plan for Net Zero and all other aspects of

environmental initiatives including waste reduction, recycling and water

conservation. More information can be found in our TCFD report.

Responsibility: Director of Learning & Development

At Marston’s we truly believe that people make pubs. We embrace the diversity

ofouremployees, our guests and our local pub communities and strive to provide

equitable opportunities for growth and social mobility. We want to create an inclusive

culture that engages and inspires, and work with charitable partners that share our

core values.

The social impact of our business includes the impact we have within the

communities of which our pubs are at the heart. It also incorporates the wide range

of wellbeing concerns, such as health, food, employment, fairness and equality.

Link to strategy: Link to strategy:

24 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

ESG: Doing more to be proud of continued

PRODUCT POLICY

Key goals

11. 50% reduction in food waste by 2030.

12. Authentication of our supply base against

our Charters and policies.

13. To ensure the product portfolio available

and information communicated

encourages guests to take responsibility

for their health.

Key goals

14. All of our pubs to be 5*EHO.

15. Maintain our FTSE4Good certification.

16. To increase the number of suppliers

onSEDEX.

Our progress

• 30.41% reduction from our baseline year

representing 60.8% achievement of our

overall 2030 target.

• 15 supplier audits completed this year in

line with our Charter.

• Across our core menus, over 80% of

dishes achieve the calorie target (where

one exists).

Our progress

• Continual tracking of scores. Currently,

93% of our pubs are at 5* EHO.

• FTSE4Good certification has been

maintained for 2023 with a score

of4outof 5 (an improvement of

0.1from3.9 in 2022).

• Currently, 96 of our suppliers have

engaged with us on SEDEX (an

improvement from 86 in 2022).

Main actions this year

• Continuous improvement and

rationalisation of our menu options to

ensure they reflect the preferences of our

guests, without contributing to excessive

waste, and our partnership with Too

Good To Go.

• Ensuring Charter documents are kept

relevant and challenging through

annual reviews.

• Ability for guests to customise their food

and drink to suit their dietary preferences

and calorie information made available

onmenus.

Main actions this year

• Our incentive schemes such as the ‘800

Club’ reward consistent performance for

our Team members and 5*EHO is one of

the requirements to qualify.

• Understand the methodology FTSE4Good

use and understand how we can improve

and report in sufficient depth to meet

their requirements.

• Identify and engage with our suppliers

who already contribute data on SEDEX,

and engage with our managers and

suppliers on issues raised in SEDEX.

Responsibility: Head of Technical Services

We want to ensure that the food and drink that we source to serve to our guests in our

pubs has as little impact on the planet as possible. We also have our guests’ interests in

mind when we provide as much information as possible about the dishes we serve to

help them make healthier choices. We are continuing to look at ways in which we

canreduce food waste in our pubs, such as partnering with Too Good To Go and

supporting our national charity partner, the Trussell Trust, menu rationalisation and

usinginnovative technology. We are on track to achieve our objective of 50% food

waste reduction by 2030.

Our focus remains on being guest obsessed and ensuring that the food and drink we

offer supports our guests to make choices based on their health or lifestyle.

Responsibility: Director of Corporate Risk

The way in which we do business is embedded into our governance framework which

is communicated to our people and partners through pragmatic policies that reflect

our ethics and values. We ensure these are effectively communicated, progressively

encouraged and monitored for effectiveness.

This includes our external reporting on ESG matters, ESG ratings, supply chain

monitoring, compliance and risk management.

Link to strategy: Link to strategy:

25Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

ESG: Doing more to be proud of continued

Taskforce on Climate-related Financial Disclosures (TCFD)

Marston’s has targeted itself to reduce

emissions and its overall impact upon

the environment. Our pathway to

achieving Net Zero is clear.

Our second TCFD report assesses the financial

impact of climate change upon our business,

the associated risks and opportunities, and

the metrics and targets to be achieved.

It is a considerable challenge that is reliant

uponreconfiguring our pubs to move

awayfrom gas to electricity generated from

sustainable sources such as solar, wind and

water. In addition, to achieve our plan, it will

beimportant to work with suppliers who are

themselves committed to achieving Net Zero

within the same time frame as our own. This

year we have mapped all the emissions of

our supply chain, which in itself is a significant

step forward. With this map we can ensure

that we are focusing our efforts on the most

impactful areas of our supply chain.

Previous environment disclosures are included

in our Annual Reports for earlier years, as well

as our TCFD report in 2022, available on

ourwebsite: www.marstonspubs.co.uk

Impact summary

• Two pubs at risk of annual flooding.

Floodingdamage across the estate

overthepast 10 years: £2 million.

• An increase in floods over the past 5 years

impacting our pubs by 120% compared to the

previous 5 years, however, it is too early to say

this is part of a discernible longer term trend.

Points of progress

• Calculation of all our Scope 3 carbon

emissionsacross our entire supply chain.

• Net Zero: move towards the electrification

ofthe estate. Enabling the electrical capacity

of our pubs and equipment.

• Innovation: installation of over 300 rapid

EV chargers in our pub estate, assisting our

gueststo move to low carbon transport.

• Water conservation: water saved by operating

our own water licence.

• Energy efficiency within our buildings, kitchen

and equipment. Review and investment.

• Introduction of an Energy Audit process to

improve energy performance and completed

over 400 energy audits completed this year.

• Promoting awareness through our internal

campaigns ‘Going Green’ and ‘Wise up

to waste’ and internal reporting, through

PowerBI.

• Guest insight tracking our consumer

preferences regarding their choices, price

sensitivity versus climate change impact.

• Technology opportunities: investigation and

implementation of new catering equipment

and specifications to reduce emissions.

TCFD disclosure compliance

The full financial impact of climate change and

Net Zero cannot presently be quantified, though

we hope to provide this in future years as the costs

and opportunities become more certain. In the

meantime, we have reduced our long-term

growth rate by 0.2% as a potential impact.

Climate change viability

The risks are not significant enough to impact

ourviability. We are well placed to deal with

challenges, seize opportunities and adapt.

CORE BUSINESS ACTIVITIES IMPACTED

KEY CLIMATE-RELATED RISKS

KEY AREAS FOR ACTION ON CLIMATE CHANGE

Drink

supply

Food

supplyBuildings

Extreme weather

Consumer habits

Legislation

Technology

Flooding

Water scarcity

Logistics

toour pubs

Short term (1 to 5 years) Long term (over 10 years)

Procurement

Miles travelled, energy

andresourcesconsumed.

Waste

Packaging waste, plastics,

volumeandrecycling levels.

Food wastage

Production, guests, storage

andsupplychain.

Energy

Sourcing renewable energy, efficiencies,

mix of sources, reduction and emissions.

OUR NET ZERO TARGETS

Carbon neutral by 2030

(Scope 1 & 2 emissions)

Carbon Net Zero 2040

(Scope 1, 2 & 3 emissions)

Read more about climate-related risks and opportunities on page 30 of this report.

26 Marston’s PLC Annual Report and Accounts 2023

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ESG: Doing more to be proud of continued

TCFD report

Recommendations we have made significant

progress against, and plan to enhance our

disclosure further.

Recommendations we have been able to fully

disclose against.

This report has followed the guidance set out in the Task Force on Climate-

related Financial Disclosures (June 2017) and the implementation advice

(issued October 2021).

At the time of publication, we have made climate-related financial disclosures consistent

with the TCFD recommendations in our TCFD report against:

• Governance (all recommended disclosures).

• Risk management (all recommended disclosures).

• Strategy (disclosures (a) and (c)).

• Metrics and targets (disclosures (a) and (c)).

The following climate-related financial disclosures are not consistent with the

TCFDrecommendations:

• Strategy (disclosure (b) – financial impact and disclosure. Due to a lack of reliable data

or uncertainty, particularly regarding future weather forecasting, we have further work

to do to be able to enhance our disclosures with respect to strategy and the financial

impact of climate-related risks. That work is underway and we expect next year to

further strengthen the level of compliance with the recommendations.

• Metrics and targets (disclosure (b) – Scope 3 emissions. Our work on scope 3 emissions

this year has been limited to food and drink supplies, that being the major area of supply

(see page 21). We seek to maintain the collection of this data in future years and its

analysis. We expect next year to provide more data about the emissions from other

forms of supply.

Please find below a summary of the Task-Force on climate-related disclosures with a key to

highlight our progress in achieving them.

Theme TCFD recommended disclosure 2023 Our disclosure Where to find it

Governance

a. Describe the Board’s oversight of climate-related

risks and opportunities

The Board is responsible for the strategic direction of the Group, including

climate-related risks and opportunities.

PAGE 4

TCFD PAGE 9

b. Describe management’s role in assessing and

managing climate-related risks and opportunities

The Executive Committee is responsible for ensuring that management has

the appropriate resources in place in order to implement our business

strategy, including those aspects which connect to climate-related risks

and opportunities.

PAGE 51

TCFD PAGE 9

Risk

management

a. Describe the organisation’s processes for

identifying and assessing climate-related risks

The risk register for climate change is managed by the Director of

Corporate Risk. Formal meetings to assess the risks with the risk owners

areheld and the assessments are re-evaluated as conditions change,

toconsider whether the risk could have a material financial impact

onMarston’s.

PAGE 41

TCFD PAGE 10

b. Describe the organisation’s processes for

managing climate-related risks

Marston’s has three strategic priorities, each of which is linked to the

effective control of climate-related risks and opportunities.

PAGE 29

TCFD PAGE 11

c. Describe how processes for identifying, assessing,

and managing climate-related risks are

integrated into the organisation’s overall risk

management

Environmental risks below are assessed in terms of their potential to cause

significant impact on our business in either a short, medium or long-term

timeframe. We consider how the implementation of identified mitigating

factors can support our strategic resilience to climate change.

PAGE 47

TCDF PAGE 12

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TCFD report

Recommendations we have made significant

progress against, and plan to enhance our

disclosure further.

Recommendations we have been able to fully

disclose against.

Theme TCFD recommended disclosure 2023 Our disclosure Where to find it

Strategy

a. Describe the climate-related risks and

opportunities the organisation has identified over

the short, medium and long term

Risks registered, including business impact, mitigations

andlinkedopportunities.

PAGE 30

TCFD PAGE 12

b. Describe the impact of climate-related risks and

opportunities on the organisation’s businesses,

strategy, and financial planning

The report shows the links between our three strategic priorities and the

actions we take for the sustainable management of procurement, food,

waste, general waste, energy usage and investment.

The full financial impact of climate change and Net Zero cannot presently

be quantified though we hope to provide this in future years as the costs

and opportunities become more certain. In the meantime, we have

reduced our long-term growth rate by 0.2% as a potential impact. More

certainty about the financial cost of converting our premises to electric

rather than gas and oil will be forthcoming in the next few years.

PAGE 29

TCFD PAGE 11

c. Describe the resilience of the organisation’s

strategy, taking into consideration different

climate-related scenarios, including a +2°C

orlower scenario

The modelling which is most pertinent to our business is for flooding within

the UK. Environmental predictions about climate change within the UK up

to global warming of 2°C are speculative and impractical, particularly

when applied to a large number of individual properties. As an alternative,

we have considered which of our properties are in low, medium or high-risk

areas for flooding as defined by the Met Office.

From our assessment, we do not consider that we have high climate related

viability risk in the short to medium term on our direct operations.

PAGE 36

TCFD PAGE 17

Metrics and

targets

a. Disclose the metrics used by the organisation to

assess climate-related risks and opportunities in

line with its strategy and risk management process

Marston’s employs the services of an energy bureau (ISTA) to identify our

monthly energy usage per site and calculate the total Scope 1 & 2 emissions

across our estate. ISTA collects electricity and gas meter readings from our

sites, working alongside our Energy Manager to estimate readings, if none

are available, and investigate unusual recordings.

PAGE 38

TCFD PAGE 20

b. Disclose Scope 1 & Scope 2 and, if appropriate,

Scope 3 greenhouse gas (GHG) emissions, and

the related risks

Marston’s provides a full disclosure of Scope 1 & 2 emissions. For Scope 3

emissions, we are making progress with industry partners to calculate

these emissions, and collect the data as it becomes available

fromsuppliers. We are collecting data on the emissions attributable to

other forms of supply into the business and expect to provide more detail

next year.

PAGE 38

TCFD PAGE 20

c. Describe the targets used by the organisation to

manage climate-related risks and opportunities

and performance against targets

Our target is our Net Zero plan and our move towards the electrification of

the estate. The financial impact of climate change and Net Zero cannot

presently be quantified. We hope to provide more information in future

years as the costs and opportunities become more certain.

PAGE 39

TCFD PAGE 21

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TCFD report

STRATEGY

Marston’s has a clear guest-focused

pubstrategy in order to operate ‘Pubs to be

proud of’ which includes the following goals:

• Loved by guests: all our pubs

withaReputation score 800 or more.

• Trusted: all our pubs to be 5* EHO.

• Great place to work: to achieve a Your

Voice score of 8 or more.

• Sales culture: maximise footfall and sales

per guest visit.

Our corporate goal is to be ‘Better than the

rest’ outperforming the market in food and

drink sales whilst at the same time being

asustainable and responsible business.

Toachieve and maintain such goals,

Marston’s recognises that managing risks is

essential. This includes climate-related risks.

Marston’s has three strategic priorities, all of which consider climate-related risks and opportunities:

WE ARE GUEST

OBSESSED

Marston’s aims to deliver what our

guests want, which includes making

sustainable business choices on

theirbehalf.

Procurement

Marston’s considers the environmental

record of all major new suppliers. For

food suppliers this includes the number

of miles that food travels from ‘farm

tofork’ and ethical information is

collected from our supplies through

ourFood Information System – Smart

Supplier. For other suppliers we use

information from SEDEX, which is an

online platform allowing businesses to

share information confidentially about

their ethical performance. Contingency

plans are in place tomanage supply

chain disruptions should they arise from

climate-related or other factors.

Food wastage

Food wastage is responsible for 10%

ofall global emissions and we have

committed to reducing our waste by

50% by 2030, compared to 2019. We

have already achieved a 30% reduction

through reducing menu options. Food

waste is weighed when it is collected by

our waste supplier and all food waste is

reused to generate energy.

WE RAISE

THE BAR

Marston’s seeks operational excellence

in all aspects of our business and the

key to this is the investment that we

make into training our people.

Waste

For the last five years, we have run

acampaign with our pub teams to

segregate waste so that it can be

moreefficiently recycled. Teams were

financially rewarded to increase the

proportion recycled.

Energy usage

We have launched a new energy

andcarbon employee engagement

campaign called ‘Going Green’.

Weekly energy reporting, incentives

and training and guidance is given to

reduce energy and carbon emissions.

We continue to invest in our properties

to reduce carbon emissions and energy

consumption, including building

management systems, induction

catering equipment and LED lighting.

WE WILL

GROW

Growing our business requires

asustainable platform to perform

competitively in the long term.

Legislative pressure and economic

penalties for companies who are slow

to evolve into a Net Zero business are

atrisk of not adapting.

Sustainability and investment

Our strategy for growing the business

includes reducing our reliance on

fossil fuels, as well as investing in assets

that take advantage of renewable

energy. This includes electrification

ofcatering equipment and installation

of lower carbon heating systems.

29Marston’s PLC Annual Report and Accounts 2023

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PHYSICAL RISKS AND OPPORTUNITIES

Risk Impact on Marston’s Mitigations Timeframe

FLOODING Linked metric: number of pubs flooded

An increase in rainfall, or the intensity of

rainfall, could lead to an increase in the

rate and severity of flooding.

Linked opportunity: New technology.

We have assisted Previsico with a pilot

of their flood early warning system, to

monitor and provide alerts of surface

water levels and ordinary watercourses.

Surface water flooding might otherwise

go unnoticed and an early alert

provides additional time to react to

protect the property.

A DEEP DIVE INTO THE FLOODING RISK

FORMARSTON’S IS DETAILED ON PAGE 36

• Properties in the estate susceptible to

medium level of flood risk (see Flooding risk

deep dive).

• Temporary loss of trade for a flooded site.

• Costs of repair not covered by insurance.

• Increase in insurance premiums.

• Reduced disposal proceeds for sites

negatively impacted by flood risk

devaluation.

• Higher level of flood defence in our high-risk pubs.

• All properties are insured for damage caused by flooding and storms above

a£1m deductible, with an aggregated claims limit of £3million above which

the insurer would compensate all aggregated loss. Marston’s owns and

operates acaptive insurance company registered in Guernsey which insures

£750,000 of each loss up to the aggregated claims limit.

• Cellar pumps have been deployed in our high-risk pubs and bars, such as

Pitcher and Piano in York, to allow continued trading when local water

levels are rising.

• Investment in riverbanks and river walls by the Environment Agency has

increased the protection of our riverside pubs, such as The Swan Hotel in

Upton upon Severn.

• Disposal of higher risk properties in order to reduce medium to long term risk.

The timeframe used equates to:

Short: 1 to 5 years

Medium: 5 to 10 years Long: Over 10 years Short, medium and long term

Climate-related risks and

opportunities

The potential financial implications

ofclimate-related risks and opportunities are

considered below. We do not consider that

itis possible to quantify the financial impact

of allof these risks and opportunities atthis

point in time; however, such quantification

will be considered onan ongoing basis as

the risks or opportunities become more

clear, and our TCFD reporting develops.

Risk assessment

The risks below are assessed in terms

oftheirpotential to cause significant

impactonour business in either a short,

medium or long-term timeframe, where

thefrequency and severity of the identified

risks could be impacted by climate change.

We define material climate-related risks

andopportunities as those that are

sufficiently important to our investors

andother stakeholders that they should

bereported publicly.

We will continually

reassess our evaluation ofclimate-related risks

and opportunities disclosed in our TCFD report

and Annual Report and Accounts as views of

our stakeholders evolveover time.

We will, wherever possible, remove those risks

completely that pose a threat to achieving

our strategic objectives. If avoidance is

impossible, we will seek to mitigate the risk.

We consider that our approach to managing

these risks through our strategy to climate

change and implementation of identified

mitigating factors, supports our strategic

resilience to climate-related risks.

With regard to the evaluation of risks and

opportunities associated with climate change

more time will be required to report against

the seven Climate-Related Metrics defined

within the guidance for TCFD.

Timeframe

Most of our climate-related risks impact us

across short (1–5 years), medium (5 –10 years)

and long time frames (10+ years). The risks

cannot generally be siloed into specific,

predicted time periods. The timeframe for

short term risks (1–5 years) reflects the fact that

we generally know enough about such risks to

structure our development plans and forecast

the financial impact. The timeframe for

medium risks (5–10 years) captures those risks

that have a reasonable likelihood to impact

us in the future albeit more difficult to quantify

the impact. The timeframe forlong term risks

(10+ years) captures those risks that might

becontingent upon factors in the earlier

timeframes or the there is a greater degree

ofuncertainty about when they will have

animpact.

Climate-Related Metrics

As more information becomes available

wewill look to link our risks to the Climate-

RelatedMetrics defined in the TCFD guidance

and the possible quantifications.

ESG: Doing more to be proud of continued

TCFD report

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TCFD report

PHYSICAL RISKS AND OPPORTUNITIES CONTINUED

Risk Impact on Marston’s Mitigations Timeframe

WATER SCARCITY No linked metric at present

Periods of drought could lead to water

scarcity and event driven or extreme

weather may cause challenges and

disruption in our supply chain. All our

sites use water distributed by water

wholesalers through their regional

networks. Marston’s sites have little or

no water storage on site so are reliant

on main water supply to operate.

• Localised droughts affecting water supply

to our pubs.

• Increased cost of water supply.

• Supply chain disruptions could lead to

increased costs and a reduction in

margins.

• Preventing climate change through carbon reduction and offsetting.

• Reducing water consumption though employee engagement, leak

detection and implementation of lower water consumption processes and

installation of equipment.

• Operation of our water self-supply licence, ‘Marston’s Water’, providing

water retail services: this model gives greater control of billing and data,

enabling a proactive approach to managing and conserving water.

• We are working on data sets that will help us identify properties at a higher

risk of water scarcity, and formulate a strategy to address the risk of water

scarcity in high use areas in the future.

Risk Impact on Marston’s Mitigations Timeframe

EXTREME & CHANGING WEATHER PATTERNS No linked metric at present

Extreme weather may cause

challenges and disruption in our supply

chain. Changing weather patterns, for

example longer, sustained periods of

hotter or wetter weather may change

consumer habits.

Linked opportunity: Development

ofoutside areas to take advantage

ofwarmer weather.

Commercial advantage in having a

relatively high proportion of the pub

estate with gardens.

• Supply chain disruptions could lead

toincreased costs and a reduction

inmargins.

• Dry and warm weather has a positive

impact on revenue and profitability across

our pub estate, with a larger impact on

pubs with dedicated beer gardens and

outdoor spaces, and in the period from

Easter through to Autumn. The converse is

true for periods of wet weather.

• Supply chain disruptions can be mitigated through seeking new suppliers

and/or ensuring contingency plans are in place.

• Marston’s portfolio of pubs is diverse, which positions the business well for

periods of both wet and warmer weather.

The timeframe used equates to:

Short: 1 to 5 years

Medium: 5 to 10 years Long: Over 10 years Short, medium and long term

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TRANSITION RISKS AND OPPORTUNITIES

Risk Impact on Marston’s Mitigations Timeframe

PENSION SCHEME: VALUE OF INVESTMENTS No linked metric at present

Long term sustainability issues,

including climate-related risks and

opportunities, require consideration to

maintain the valuation of pension

scheme investments.

• The absence of good stewardship around

sustainability matters could have a material

impact on the investment risk and return

outcomes of the pension scheme

investments.

• Investment Managers have full discretion when evaluating ESG issues,

including climate change considerations. The Pension Scheme Trustees use

ESG ratings provided by the Scheme’s investment consultant when

appointing and monitoring investment managers.

Risk Impact on Marston’s Mitigations Timeframe

LEGISLATION & POLICY No linked metric at present

Increased risk of non-compliance

fromaccelerated, or new, legislation

tosupport the global climate

changeagenda.

A current example of such legislation is

the UK Government’s Bill for amending

the criteria for Energy Performance

Ratings with the proposal requiring all

rented non-domestic buildings to be an

EPC Bank B by 2030.

• Increased costs to adapt and comply with

new regulations, for instance any

requirement to bring properties in line with

EPC Band B criteria.

• Increased risk of fines from non-

compliance.

• Marston’s is currently compliant with the existing EPC legislation and will

evaluate any additional expenditure required across the estate to bring all

properties to Band B if the future legislation is passed.

• Decisions would need to be made as to the viability of specific properties;

disposal of properties where cost of compliance is prohibitive and would

likely be impacted by devaluation.

• Marston’s Net Zero strategy may help to anticipate some climate change

related regulation and puts us in a good position to be able to adjust and

comply in a considered, well-planned manner.

The timeframe used equates to:

Short: 1 to 5 years

Medium: 5 to 10 years Long: Over 10 years Short, medium and long term

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TRANSITION RISKS AND OPPORTUNITIES CONTINUED

Risk Impact on Marston’s Mitigations Timeframe

CONSUMER HABITS Linked metric: food waste reduction

Change in consumer habits from

guestsentiment – prioritisation of

sustainable choices.

Linked opportunity: New technology.

Linked opportunity: Marston’s has the

largest rapid EV charging network in

theindustry.

Linked opportunity: Increase market

share by attracting guests who share a

concern for the environment, and who

feel Marston’s is contributing actively to

meeting the climate change challenge.

Linked opportunity: Increased sourcing

of local food, capturing guests’ interest in

the distance from ‘farm to fork’ and

supporting local producers with a lower

carbon footprint.

Linked opportunity: Increased energy

efficiency and reduced usage.

• Where consumer preference and demand

shift towards more sustainable choices, we

would see more demand for food and drink

options perceived as responsible or

environmentally friendly. This may include

guests seeking pubs with local meat and

produce suppliers (‘farm to fork’), wines that

have not been transported across the

globe and vegan/vegetarian options.

• Guest sentiment to climate change could

move demand to pubs which are

supportive of investing in new technology to

reduce emissions.

• Adapting to any changing consumer habits

is an opportunity for growth. Failure to adapt

could see a reduction in market share.

• Marston’s utilises guest insight data to track changes, monitor consumer

habits and assess opportunities and risks from changing habits.

• Marston’s ESG strategy and progress made to date, such as reduction in

waste and a rapid EV charging network, puts us in a strong position.

The timeframe used equates to:

Short: 1 to 5 years

Medium: 5 to 10 years

Long: Over 10 years Short, medium and long term

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TRANSITION RISKS AND OPPORTUNITIES CONTINUED

Risk Impact on Marston’s Mitigations Timeframe

TECHNOLOGY Linked metrics: CO

emissions and food waste reduction

As UK and global businesses invest in

sustainable technology and production,

input costs to our business, including

energy and food procurement,

couldincrease.

Linked opportunity: Installation

andoperation of Build Management

Systems to monitor and automate

heating levels in pubs to reduce

energyusage and save costs.

Linked opportunity: Automation

ofwhen lights in our pubs come on

andoff to reduce energy usage.

• Global and national action to reduce

emissions will likely increase costs of raw

materials, production and distribution,

increasing costs throughout supply chains.

• Cost of energy will be impacted by the

changes required to move away from

fossilfuels and towards sustainable

energysources.

• As the Group proceeds on its path to Net

Zero, operating costs could increase in the

short term, but making these adjustments

sooner will mean the Group is in a

competitive position for the future and

should reduce its long-term costs.

• Transitioning the business to increased levels of renewable energy, including

possible power purchase agreements with renewable generators to

increase hedging periods.

• Catering equipment is sourced to increase efficiencies including fryers that

filter oil to increase oil life and high efficiency chargrills.

• Future catering and heating systems to include electric and low carbon

technology. This will include upgrades to electric supplies to facilitate the

transition to electric and low carbon.

• Cabinet refrigerators are high efficiency hydrocarbon units.

• LED lighting is installed in all internal areas.

• Adopting new technologies comes with additional costs in the short term,

however, it may lead to cost savings in the longer term as well as bringing

environmental and sustainability benefits, making us more appealing to

customers, investors and financial institutions.

The timeframe used equates to:

Short: 1 to 5 years

Medium: 5 to 10 years Long: Over 10 years Short, medium and long term

34 Marston’s PLC Annual Report and Accounts 2023

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TCFD report

RISK SCENARIO MODELLING

Global temperature scenario

modelling

We have considered the following impacts

based on scenarios involving different

increases in global temperatures. We intend

to disclose more information on quantifying

these scenarios as more information becomes

available. The considerations are as follows:

Below 2°C

Potentially higher transition costs in the

shortterm (1–5 years)/tighter government

restrictions/more orderly transition.

Transition risks within this scenario:

compliance with government legislation

adding to additional operating and

reporting costs/additional energy costs

associated with carbon fuels/additional cost

of compliance and energy costs borne by

our suppliers increasing particularly food

anddrink costs for Marston’s/guest opinion

divided regarding the measures taken to

reduce climate change.

Between 2°C to 3°C

Potentially higher transition cost in the

medium term (5–10 years)/more flood costs/

more water scarcity/government action

delayed but more aggressive in the longer

term/more technological opportunities/

global economic impacts.

Transitional risks, the same as the 2°C

scenario, albeit delayed to within 5–10 years:

risk that more flooding creates more repair

costs and in certain locations property

insurance becomes more expensive/more

extreme weather either hot, cold or wet

couldbe difficult to predict and might

impact guest behaviour in a negative way

including reduced or shortened visits/

globally, production and transportation costs

could increase in order to absorb transition

costs ascountries ramp up their response to

climatechange.

Above 3°C

Lower transition costs in the short term/

government action delayed/additional

flooding/more heatwaves/increased cooling

costs/guest menu choices may change/

global economic impacts increased.

Transition risks, same as the previous

scenarios albeit relatively delayed further to

10 years or beyond: increased risk of flooding

or fire causing damage to properties/risk

that government legislation, albeit delayed,

is more draconian and imposes a swifter

transition that results in higher costs/guests

might be more tolerant to changes brought

in by the business, accepting that urgent

action is required.

Flooding/water scarcity risk

scenario modelling

The risk of our pubs impacted by other factors

associated with climate change, for instance

wild-fire is not thought to be high enough to

warrant modelling.

Environmental predictions about climate

change within the UK up to global warming

of2 degrees are speculative, particularly

when applied to individual properties.

Tryingto scenario plan what might happen

toeach of our individual pubs is not

economically practical.

At best it could only be done on asmall

sample of pubs and the results extrapolated

across the estate. However, such a method

does not justify itself given thespeculative

nature of the data.

As an alternative we have considered

whichof our properties are in low, medium

orhigh-risk areas for flooding as defined by

the Met Office. It is reasonable to assume

thatmore properties will move to the

higherrisk end of this spectrum if the global

temperature continues to rise. However, what

the exponential increase in damage to our

ownpubs would be is unknown.

Currently, onaverage, over the last 10

yearssignificant flood damage (greater than

£10 thousand per site) only occurs on average

2 to 3 times a year. Atpresent, flooding in

ourestate is not following any discernible

trendwhich could support any empirical

calculation of what thelevel of damage

might be in the future.

We are also in the process of assessing

climate related water scarcity risk down to

asite level. This will allow us to identify and

classify the risk of properties affected by

water scarcity dependant on defined

climatescenarios.

35Marston’s PLC Annual Report and Accounts 2023

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TCFD report

Flooding risk deep dive

Over the past 10 years there has been no discernible trend of increased flooding at our

properties, albeit the number of floods experienced in the last 5 years is 57% higher than

the previous 5 years. It is too early to say whether this is an indication of a long-term trend.

Financial year Number of floods

Largest loss (pub damage)

£(’000)

Total loss (pub damage)

£(’000)

2023 – – –

2022 1 73 73

2021 3 773 866

2020 6 103 311

2019 1 133 133

2018 – – –

2017 1 37 37

2016 5 197 533

2015 – – –

2014 1 32 32

TOTAL 18 1,985

The number of floods we have experienced over the last 10 years does not indicate that

the frequency of flooding has increased, however, 10 years of data may not be long

enough to capture the broader trend of flooding.

Nationally more severe floods have been reported in the last 20 years, and Marston’s pubs

have been caught in some wide-area floods reported. These have included:

Financial year

Number of pubs

flooded Town Loss (£’000)

2016 4 Cockermouth, Cumbria 504

2013 1 St Asaph, Denbighshire 939

We have assessed our surface water and

river and sea flood risks according to the

Environment Agency data available on

Gov.uk. Surface water flooding, sometimes

known as flash flooding happens when

heavy rain cannot drain away. It is difficult

to predict as it depends on rainfall volume

and location (it can happen up hills and

away from rivers and other bodies of water)

and is more widespread in areas with

harder surfaces like concrete. River and

searisk considers flood defences.

The assessed risks are not property specific

– instead the data is designed to give an

indication of risks in geographical areas.

The risks are defined as:

• Very low risk means that each year this

area has a chance of flooding of less

than0.1%.

• Low risk means that each year this area

has a chance of flooding of between

0.1%and 1%.

• Medium risk means that each year

thisarea has a chance of flooding

ofbetween 1% and3.3%.

• High risk means that each year this area

has a chance of flooding of greater

than3.3%.

• Acute risk means site is at risk of

annualflooding.

Flood risk – number of sites per

riskrating

Surface

Water Risk

River & Sea

Risk

Acute risk

2 0

High risk

239 30

Medium risk

218 60

Low risk

362 80

Very low risk

571 1,221

Ungraded 22 23

Total 1,414 1,414

1 As assessed internally

2 According to the Environment Agency data set

The table above includes all sites where

there is available data.

The Group has moved to annual external

valuations of its property portfolio. Pubs

arenow valued on a rotational basis, with

approximately one third inspected each

year. The first external valuation on this basis

was undertaken in July 2022, the results of

which were reflected in the 2022 Annual

Report and Accounts.

The valuations consider all factors that

couldimpact valuation and cause

financialimpairments, impacting the

income statement and balance sheet.

Thesewill include risks of flooding, increased

costs of compliance (e.g. EPC certificates)

and any other environmental related

factorsthat may arise.

36 Marston’s PLC Annual Report and Accounts 2023

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TCFD report

Climate-related viability statement

The full financial impact of climate change

and Net Zero cannot presently be quantified

though we hope to provide this in future

years as the costs and opportunities become

more certain. In the meantime, we have

reduced our long-term growth rate by 0.2%

as a potential impact.

The feasibility to convert our pubs over to all

electric from gas and oil, and the normal

cycle of equipment replacement, reduces

the cost impact of the transition to Net Zero.

As a UK pub operator, we do not consider that

we have high climate-related risk in theshort

to medium term on our direct operations.

Whilst we do have risks and opportunities, as

outlined in this report, the risks are not material

enough to impact ourviability.

Furthermore, with the actions we have

already taken and continue to take in moving

our ESG and Net Zero agenda forward, we

consider that we are well-placed to deal with

any new challenges asthey arise, seize new

opportunities, andadapt as appropriate.

We will be assessing these risks each year

toconsider any changes and whether

theyhave a material impact upon our

businessforecasting.

Climate change opportunities

All businesses around the global will need

toadapt to the changing climate; the more

successful businesses will at the same time

seize the opportunities that come with

thatadaption.

For commercial reasons we cannot provide

figures, however all the following initiatives

collectively contributed a significant

amount towards our gross profit this year.

In no particular order:

• EV chargers in our pub car parks

• Cooking oil collections from the pubs

• Amazon and In Post lockers

• Clothing banks

37Marston’s PLC Annual Report and Accounts 2023

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Source

e tonnes

75,015

74,833

2023

2022

Greenhouse gas emissions intensity ratio

e tonnes per £100,000 turnover

8.60

9.21

2023

2022

Energy usage

Scope 1 & 2 (mwhrs)

359,431

369,397

2023

2022

ESG: Doing more to be proud of continued

TCFD report

METRICS AND TARGETS

This year, where possible, we have

calculated the Scope 3 emissions for energy

consumed by our supply chain. To achieve

this we have worked with the Zero Carbon

Forum to identify the emissions associated

with the services and goods our industry

receives factoring in the specific detail for

our own suppliers, for instance where goods

are sourced globally.

Our emissions have been assessed in

accordance with the ‘GHG Protocol

Corporate Accounting and Reporting

Standard’ and in line with Defra’s

‘Environmental reporting guidelines:

including Streamlined Energy and

CarbonReporting Requirements’.

We work with a third-party energy bureau

(ISTA) to identify our energy usage per site

each month, in order to calculate the total

Scope 1 & 2 emissions across our estate. ISTA

collects electricity and gas meter readings

from our sites, working alongside our Energy

Manager to estimate readings where

noneare available and investigate

unusualrecordings.

GREENHOUSE GAS EMISSIONS BY SOURCE

(Scope 1 & 2, and Scope 3 relating to business mileage)

Of which 2023 2022

Electricity & gas 66,576 66,672

Petrol & diesel 1,200 1,135

Refrigerants – pubs 4,972 5,061

LPG 2,067 1,780

Oil 200 185

Notes:

1 We report on all the measured emissions

sources required under the Companies Act

2006 (Strategic report and Directors’ reports)

Regulations 2013.

2 Data collected is in respect of the year

ended30 June 2023, in accordance with

theStreamlined Energy and Carbon

Reportingregulation.

3 Gas consumption compared to last year

decreased by 1%. Electricity consumption

decreased by 6%. To reduce the energy

consumed we focus each year on

variousinitiatives.

4 Our catering equipment is sourced to increase

efficiencies including fryers that filter oil to

increase oil life, and high-efficiency chargrills.

All of Marston’s cabinet refrigerators purchased

are high-efficiency hydrocarbon units. We install

LED lighting in all the internal areas and in our

back of house areas use integrated movement

sensors, reducing the operational hours of

lighting. We also fit voltage optimisation.

5 The Greenhouse gas emissions intensity ratio

has decreased this year reflecting the total

decrease in energy consumed this year of 3%.

This reduction is partly as a result of the mild

winter this year but also as a result of the

initiatives we have taken to increase

energyefficiency.

6 CAPEX works present an opportunity to reduce

energy usage and lower carbon emissions and

operating costs. The standard measures

included in refurbishment works are:

• LED Lighting

• Insulation and draught proofing

• Heating and hot water controls

• Cellar fresh air cooling and

managementsystems

38 Marston’s PLC Annual Report and Accounts 2023

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Total Emissions Breakdown (Scopes 1,2 and 3)

Property, energy (18)

Fuels (6)

Food & drink (43)

Capital goods (33)

Scope 3 food and drink constituents

% CO

(tonnes)

Other (12)

Raw meat (41)

Alcoholic drinks (15)

Fruit, vegetables,

nuts (15)

Ready meals (17)

ESG: Doing more to be proud of continued

TCFD report

TARGETS

Our Net Zero strategy has been developed

in alignment with the Zero Carbon Forum, a

hospitality sector body which shares expertise for

the shared purpose of achieving Net Zero. The

forum aims to support the sector to decarbonise

at pace and is aiming to push the sector to

reach Net Zero by 2040. Our targets for reducing

emissions arethesame as our plan to achieve

Net Zero:

Progress against our roadmap to Net Zero

wasreported for the first timein our 2022

AnnualReport and Accounts within Key

Performance Indicators.

As we proceed with the transition to Net Zero it

is likely we will adopt additional targets to track

progress. We intend to report on these targets as

they become operational in future years.

As further targets become available we intend to deploy them to disclose in future reports.

Carbon neutrality by

2030

Scope 1 & 2 emissions

Reach

Net Zero

by 2040 (Scope 3). 2023 is an

appropriate baseline given

changes to the business in

recent earlier years.

Reduce food waste by

50%

by 2030 (measured against

2019 as a baseline)

Introduce the use of

carbon offsets

to cover remaining emissions,

which cannot be mitigated

using other actions.

39Marston’s PLC Annual Report and Accounts 2023

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Risk and risk management

The current macroeconomic

environment has been challenging

tooperate within this year. Inflationary

pressure on consumers led to a

cost-of-living crisis, higher mortgage

rates have put a squeeze on people’s

disposable income and energy

costshave increased. At Marston’s,

we have been able to manage this

economic risk by continuing to drive

our existing strategy, consistently

delivering high levels of engagement

with our people and guests and

raising standards through our

greatpub teams.

We monitor performance which shows our

strategy is mitigating thiseconomic risk as

our guests still want to go out and enjoy an

affordable treat in our pubs. Our Reputation

score continues to improve overall; almost

half of our estate isnow achieving a score

of 800 or more. Safety standards continue to

improve; 93% of our managed or partner

pubs now score a 5* EHO rating. Our Your

Voice engagement score has been

maintained at 8.2.

Our People Promise created last year helps

to ease the challenging and competitive

labour market for us to recruit great talent.

We have been diligent in managing costs

during the year, to help mitigate inflationary

impacts on the business through a

combination of simplifying our processes,

reducing stock lines, cost efficiencies and

pricing strategies. We have reduced net

debt with the aim to achieve a level below

£1 billion in 2026. We successfully secured

an amendment and extension to our

banking facility and private placement to

the end of January 2025. The facilities are

comprised of both a Revolving Credit

Facility (the ‘RCF’) on a variable rate, which

is partially hedged, and securitised debt

which is fully hedged until 2035, providing

protection against changes in interest rate

movements.

Another risk for Marston’s is navigating

thedynamics of the market in which we

operate. Data driven estate reviews have

helped to determine the best operating

model and format for our pubs, as described

further on page 10. This has been a key driver

ofthe increase in disposals this year and

ouraim to transition 50 pubs into a new

partnership agreement for food-led pubs.

Following the separation of systems from

CMBC last year, our IT systems have been

relatively stable, allowing new business

processes to bed themselves in and allow

our IT team time to focus on enhancements

that will better support our business.

Thisyear, our IT network was moved

to‘TheCloud’, with no disruption to

thebusiness, thereby removing

physicalrisksfrom its operation.

In addition, through comprehensive project

planning and meticulous attention to detail,

the movement of our main office functions

to StJohns House, in Wolverhampton, was

managed seamlessly without disruption.

Following the pandemic, global supply

ofgoods has returned to normal, albeit

suppliers have been challenged to maintain

margin due to energy prices increases and

inflation. The delivery of goods to our pubs

remains strong despite these challenges

and we work closely with our key suppliers

to help support their margins, recognising

the value of long-term relationships to deal

with current risks.

This year, we have also conducted a

reviewof our drinks category, significantly

simplifying the range without compromising

the offer to our guests.

Our sales culture call to action: ‘Never full,

fancy another’ is core to delivering growth

by ensuring that we maximise spend per

visit and that we can always accommodate

another guest, regardless of how busy apub

is. We introduced new incentive schemes

and technology to embed thisfurther.

Theguest journey has been facilitated

byextending the rollout of our booking

systemacross the pub estate to ensure

animproved booking experience and

enhancing the functionality of our order

and pay system, focusing on the outdoor

trading opportunities.

Risk management at Marston’s

Responsibility for risk management resides

throughout the business and our Board and

Audit Committee recognise the importance

of sound risk management in order to

support the achievement of our strategic

objectives. Our Executive Committee

monitors the control of risk and makes

decisions having reviewed sufficient

information about the risks and

opportunities involved. Risk management is

carefully designed into our policies and

processes by policy owners. This year we

launched our new ‘People Handbook’ to

communicate our policies in a more

engaging and organised manner.

Readmoreon our website:

www.marstonspubs.co.uk.

We respond to threats and opportunities

inour operating environment by designing

processes of risk management that mitigate

the impact to an acceptable level. Many

ofthe risks faced by our business are due

toexternal factors, some of which, such as

inflation and energy prices, are unavoidable

and must be robustly mitigated if our

strategicobjectives are to be met. Our risk

management processes aim to anticipate

risks before they impact upon our activities,

toensure that we are in the best place

tomitigate them and recognise the

opportunities they bring in a competitive

marketplace. Our guests have a high

expectation that our business will operate in

asafe manner and our risk management

practices are designed, monitored, audited

and where necessary re-modelled to protect

our reputation for excellent service.

Managing uncerainy and new opporuniies

40 Marston’s PLC Annual Report and Accounts 2023

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Risk and risk management continued

Risk management is primarily aimed

atthecontrol of uncertainty. For all our

keyrisks, we identify the key mitigating

controlsand their ownership. Our assurance

activities are focused upon those key risks so

that we continually understand and monitor

the strength of our controls. Maintaining a

strong relationship with our guests is implicit

to our success. As set out on page 10,

ourReputation score provides essential

information about our levels of service

andthe scores help us to focus on those

sites where improvements have the

greatestreturn.

We build resilience into our supply

chainwhilst recognising the commercial

importance of taking risks within an

acceptable tolerance. We invest in our

ITnetwork to ensure there is sufficient

capacity and resilience to mitigate the

threat of disruption. We actively consider

and rehearse unexpected scenarios

whichcould impact upon us at short notice.

This in turn informs the practices and policies

which we follow, and the emergency plans

we adopt.

These risks include climate-related risks and

formal meetings to assess these risks are held

twice a year with the risk owner and, more

regularly, the assessments are re-evaluated

as conditions change. These assessments

consider whether an identified risk could

have a material financial impact on

Marston’s. Climate-related risks have

nowalso been added to the corporate risk

thelevels of assurance gathered regarding

effective risk mitigation. More information

can be found in our TCFD report at

www.marstonspubs.co.uk.

Our appetite for risk

Marston’s is open to taking risks, providing

they align with, and help us to achieve, our

strategic objectives in a responsible way

and within agreed parameters. Marston’s

will, wherever possible, completely remove

risks that pose a threat to achieving

ourstrategic objectives. If avoidance is

impossible, we will seek to mitigate risk by

investing in effective controls or by sharing

risks with a third party. These controls are

managed and monitored to give

assurancethat the risk level is in

accordance with theparameters

setbytheExecutive Committee.

It is our understanding that our overriding

principle of care for our stakeholders, our

communities, and the environment is a

priority for our strategic objectives.

We continually review risk to ensure

weguard against any threats to health,

hygiene, or safety. Our gas price is fixed until

the end of March 2025 with no additional

incremental spend anticipated. The

electricity supply for the business is

contracted until the end of FY2024.

This statement represents the Board’s

appetitefor the level of risk which it is

prepared to accept to achieve its business

strategy. The Board proactively seeks to

understand the risks faced and gain

asharedunderstanding of the risk

management practices operated

andtheirdegree of effectiveness.

41Marston’s PLC Annual Report and Accounts 2023

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Risk and risk management continued

Principal risks

The risks are plotted on the matrix according to impact and likelihood.

The placing of the risk reflects the position after the mitigation by controls.

Impact

Likelihood

Economic and political

Market & operational/

guestsentiment

Liquidity

Financial covenants,

pensionfund deﬁcit &

accounting controls

ESG

Health & safety, food safety

Information technology

Pandemic

Key:

Reducing

Less movement

Current key risk drivers

A. Economic, market, operational, guest sentiment

The cost-of-living crisis and reduction in people’s disposable income increases the

need for our business to remain as an affordable treat. Our marketing aims to ensure

that our pubs are appropriately positioned to make the most from occasions when

people do go out. During the year, we have outperformed the market, reflecting the

efforts taken to keep our offer current and aligned with guest expectations. Whilst the

economy is challenging, there exists the opportunity to win market share particularly

from more expensive operators.

B. Liquidity and financial covenants

Despite the challenging macroeconomic environment, drink sales have performed

well and food sales are encouraging, demonstrating the trading resilience of the

predominantly community pub estate. Operating cash inflow and net cash inflow have

been sufficient to allow the Company to reduce debt, which in turn mitigates liquidity

risk. The demand for our pubs and hotel rooms has remained strong demonstrating our

long-term viability. The cost outlook, and consumer confidence, are steadily improving.

C. ESG

Our plan to achieve carbon neutrality has been formulated and this year we have

started to prepare our estate for electrification. The achievement of Net Zero will be

dependent upon securing renewable energy at an affordable price and, as such, is a

moderate risk due to its dependence upon the Government’s ability to create more

sources of supply. Net Zero is also dependent upon how quickly our suppliers move to

Net Zero and our ability to switch products and suppliers. Our energy saving internal

campaign ‘Going Green’ and initiatives rewarding energy conservation help raise

awareness and our progress to Net Zero.

42 Marston’s PLC Annual Report and Accounts 2023

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Risk and risk management continued

Our principal risks and uncertainties

1. ECONOMIC AND POLITICAL Link to strategy:

Potential impact Risk context Risk description Mitigation

• It may become more challenging to

secure long-term agreements with our

suppliers due to price rises and demand.

• Economic factors such as inflation and

high demand for certain commodities

and products impact our operating costs

and those of our supply chain.

• Changes to Government policy can

directly target our business and impact

our cost base.

• Wider legislative changes can also

impact our business such as the move to

de-carbonise the economy, control

inflation or increase taxes.

• The UK, like many countries, is at risk

ofarecession, exacerbated by high

energycosts and global demand for

commodities, which could be in short

supply. A recession could increase

unemployment and further lower

consumer confidence.

• There is a risk that inflation remains high

and interest rates continue to increase

and remain high for a long time.

• To constantly review and maintain the

positioning of our guest offer at the right

price point, to maintain or grow margin

whilst remaining competitive.

• Continue to lobby Government on

mattersthat are likely to restrict trade

orincrease costs.

• Regularly assess our supply contracts and

renegotiate terms when they fall due.

• Where feasible, work with our key suppliers

to hold sufficient stocks to cover short-term

disruption.

• Consider alternative sources of supply if our

suppliers have trouble importing goods.

Risk movement – No change

Inflation impacts the cost base for our business as well as our suppliers and our partners and reduces the purchasing

power of our guests.

Linked opportunity

Pubs normally remain very competitive when prices are

risingin the economy, offering an experience which can be

flexed to suit demand. Our ability to track and react quickly to

changes in preference could offer a competitive advantage.

Our scale of operations and long-term stable relationships

withsuppliers could also help us control costs better than

ourcompetitors.

Considering all known risks that have the potential to impact our performance and our

strategy, the following represents the principal risks as recognised by the Board.

Risks change over time and therefore the risks noted here cannot be a complete assessment.

43Marston’s PLC Annual Report and Accounts 2023

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Risk and risk management continued

Our principal risks and uncertainties

2. MARKET AND OPERATIONAL/ GUEST SENTIMENT Link to strategy:

Potential impact Risk context Risk description Mitigation

• Reduction in guest satisfaction levels

andrepeat visits to our pubs.

• Inability to pass increased costs on

toourguests thereby reducing our

operating margin.

• Revenue is dependent upon being able

to offer, and attract our guests to, an

enjoyable experience of high-quality

food and drink at the right price.

• Guest sentiment is affected by a range

of external conditions impacting

consumer confidence, including cost

ofliving, weather and, in recent years,

the pandemic.

• We compete for high calibre people to

operate our pubs and focus heavily on

their training and management.

• We carefully choose our suppliers and

the food and drink we offer.

• The uninterrupted operation of our

business is reliant on a continual supply

of goods and services, often from

singlesources.

• As economic factors make it more

expensive to go to the pub, guests

become more sensitive to experience

not meeting expectation.

• There is an increased risk that our own

prices become uncompetitive, thereby

restricting the opportunity to pass on

future cost increases.

• Consistently maintaining high standards

becomes more critical to ensuring our

guests return.

• Failure to attract, train and retain the

best people can impact our pubs’

performance. Recruitment remains

competitive within a tight labour market

and wage inflation.

• Disruption to key suppliers, particularly

those closely involved with our day-to-

day activities, or a shortage of

commodities could significantly impact

our operations.

• These factors could mean that our pubs

fail to attract guests due to poor service

or quality, or do not keep up with

changing preferences.

• Continual assessment of guest preferences

using market and consumer insight data.

• Analysis of sales performance data of single

sites and by pub format.

• Pricing strategy built upon careful analysis,

insufficient detail, of guests’ sensitivities.

• Clear marketing campaigns, including

digital marketing.

• Tracking our reputational scores on

socialmedia and targeting our sites

toalways improve.

• Cost control, including menu margin

analysis.

• Investment, location and design of our pubs.

• Continuous review of our people offer

compared to our competitors through

participation in appropriate networks.

• Improved training, induction and

development programmes.

• Tracking the engagement of our people

and identifying action points for teams.

• Offering employee incentives to

increasesales.

• Continual assessment of suppliers’ resilience

and capacity.

• Contingency planning with suppliers:

identifying how products or services can be

substituted if necessary.

Risk movement – No change

Difficult economic conditions and the cost-of-living crisis continue to impact our guests and the choices they make.

Wehave increased our standards to meet this challenge to satisfy the expectations of our guests and ensure value

formoney.

Linked opportunity

Build our reputation as a trusted, affordable, high-quality

experience, gaining additional revenue from guests

lookingtoreduce their spending compared to more

expensive competitors.

44 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Risk and risk management continued

Our principal risks and uncertainties

3. LIQUIDITY Link to strategy:

Potential impact Risk context Risk description Mitigation

• The liquidity of the business could

comeunder strain because of economic

pressures on the pub sector, particularly

if rising prices cannot be passed on

toconsumers.

• One element of our financial strategy

isto reduce debt below £1 billion. The UK

economy may go into recession due to

inflation, interest rates, volatile energy

costs and a fall in consumer confidence.

• As consumers reduce spend in response

to higher prices, it is uncertain how this

might impact our pubs.

• In similar circumstances in the past, pubs

have remained attractive and

affordable; however, this might not

always be the case.

• Significant headroom in our bank facility

toprovide operational liquidity. See our

Viability Statement on page 53.

• Reduce debt.

• Conserve liquid funds by reducing costs.

• Maintain strong relationships with

financialbackers.

• Lobby Government on the importance of

the hospitality trade to the UK economy.

• Plan for resilience within our financial model

to cover an economic downturn.

Risk movement – No change

Inflation is falling however, interest rates remain much higher than in recent years. The economic outlook is uncertain,

reducing public confidence and impacting the spend available for leisure. The Company mitigates the impact of this

by reducing its costs and keeping its offering to consumers attractive and affordable.

Linked opportunity

Higher-priced or less attractive operators could be forced

outof the market, creating more opportunity for Marston’s

tostand out.

45Marston’s PLC Annual Report and Accounts 2023

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4. FINANCIAL COVENANTS, PENSION FUND DEFICIT AND ACCOUNTING CONTROLS Link to strategy:

Potential impact Risk context Risk description Mitigation

• Reputational damage and additional

financial operating restrictions and fees

imposed by lenders.

• Loss of investor confidence.

• The Company’s financial systems

handlemany transactions accurately

and securely.

• Precise reporting is key to running the

business effectively, and in compliance

with our financial covenants.

• It could result in a breach of the

covenants with our lenders due to

incorrect reporting of financial results.

• The pension deficit might also increase if

investment yields fall.

• Unauthorised transactions could be a

major risk along with accounting controls

either failing or being overridden.

• Covenant waiver permission sought from

bondholders/financial lenders.

• Regular detailed management accounts,

budgets and forecasts.

• Detailed financial data collected from

oursites.

• Financial auditing of our sites based on

dataanalysis.

• Constant monitoring of financial ratios.

• Internal and external audits.

• Segregation of duties.

• Access controls within our systems.

• Levels of authority.

• Commitment to reduce debt.

Risk movement – No change

There are strong controls maintaining this risk to a low level. The impact on our covenants is reduced by clear

andregularcommunications with our lenders.

Linked opportunity

To further strengthen our relationships with our bondholders,

communicating information periodically on the business and

the impact of economic factors on our sector.

Risk and risk management continued

Our principal risks and uncertainties

46 Marston’s PLC Annual Report and Accounts 2023

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5. ESG Link to strategy:

Potential impact Risk context Risk description Mitigation

• The Company could be exposed to

additional costs or inefficiencies if forced

in the future to act on ESG issues as a

result of external pressure or legislation.

• Adopting a clear plan on ESG facilitates

decision making at the right time,

ensuring that investments are made at

the appropriate point in terms of cost

and efficiency.

• There is clear reputational benefit

incommunicating changes made

because they are the right thing to do,

rather than being purely reactive.

• Initiatives such as the transition to Net

Zero build sustainability into our business.

Such preparations for the future position

the Company to better meet future

operating conditions and ensure

sustainable success.

• Stakeholder expectation could further

drive the ESG agenda in the future,

necessitating changes to our business

model and increasing our operating

costs and reporting responsibilities.

• We have seen an increase in

climatechange-related risks, such

asunpredictable and extreme weather

conditions and scarcity of natural

resources, as well as a strong demand

forrenewable sources of energy.

Thesefactors could lead to supply

chainand sourcing disruption as well

asimpacting trade.

• Without a clear strategy on ESG the

Company could find in future that it is

forced to make changes to comply with

stakeholder expectation or Government

legislation.

• The reputation of the Company could be

damaged if its stance on ESG is not

clearly communicated, or if it cannot

demonstrate what actions have been

taken or targets set. The perception of

the Company could be tainted for

guests, employees, lenders and investors

without a clearly communicated position

on ESG issues, backed up by actions and

progress against targets.

• During our transition to Net Zero, higher

energy prices might make it more

difficult to source renewable energy at a

commercial price. This increases the risk

that the transition is delayed or becomes

more costly.

• Our plan for achieving Carbon Neutral by

2030 (Scope 1 & 2) and by 2040 (Scope 3).

Toconsider and, where possible, procure or

promote energy from renewable or self-

generated sources.

• To reduce the volume of water we consume

across our estate every year.

• To work with our supply chain to achieve

and maintain zero waste to landfill.

• To reach an overall recycling rate in our

business of at least 75%.

• Increase reclaimed rates of cooking oil to at

least 60%, compared to what we purchase/

consume across our estate.

• Energy contracts to provide price stability.

• Supporting our supply chain to achieve

NetZero.

• Investment in energy saving projects and

technological innovation, such as heat

source pumps, building management

systems, cellar cooling, voltage optimisation,

airflow rather than ventilation and catering

equipment efficiency.

• 50% reduction in food waste by 2030.

Risk movement – No change

The impact of climate change upon the planet is becoming more noticeable and more destructive. Pressure remains

onthe Government to further legislate to move the economy away from its reliance on fossil fuels and penalise future

useof such fuels. Currently, energy prices have fallen from the excessively high levels reached last year caused by

global events. Our plans to achieve carbon neutrality and Net Zero are dependent upon the Government’s ability in

the future to provide renewable energy at a reasonable price.

Linked opportunity

Our efforts to de-carbonise are supported by our guests

andsuppliers who themselves are increasingly likely to make

sustainable choices.

Risk and risk management continued

Our principal risks and uncertainties

47Marston’s PLC Annual Report and Accounts 2023

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6. HEALTH & SAFETY, FOOD SAFETY Link to strategy:

Potential impact Risk context Risk description Mitigation

• Financial penalties on the business.

• Significant damage to reputation.

• Increased business complexity impacting

upon our guests’ experience.

• The safety of our guests, our employees,

and the general public, is a fundamental

priority. We continually seek to drive the

highest standards, recognising that

lapses in safety potentially damage trust

and reputation.

• Allergens represent a distinct risk for our

business which is reliant upon food sales.

The provision of accurate and reliable

information on food to our guests is

paramount. Our guests trust in our high

standards of food hygiene, food

preparation and quality

• Breaches of health and safety

regulations could attract media

attention and potentially high penalties.

• Public concern over allergens remains

high. There is a risk that information is

collected incorrectly from our suppliers

and/or misinterpreted for our menu

items. There is the risk that a team

member mis-advises a guest or serves

the wrong meal.

• Increased regulation could increase the

complexity of the information to be

provided to the public and thereby

increase our cost of compliance.

• Embedded health, safety and hygiene

management systems.

• Dedicated safety advisers in our pubs

seeking continuous improvement.

• Regular independent expert safety audits.

• Training of team members including

e-learning modules on specific risks such as

allergens, for completion by all employees.

• Escalation of potential safety threats to

senior operational management.

• Maintaining excellent levels of compliance

through policies, training and monitoring.

• Working with our supply chain to increase

thelevel of detail held in our food system

identifying the constituent ingredients and

allergens within the food and the drinks

weserve. Providing a clear audit trail and

removing, where possible, the chance of

manual error.

• Due diligence on accepting new suppliers

through monitoring and tracking.

• Controlling the range of food and drinks sold

while enhancing the data collected on them.

Risk movement – Decreased

The continued development of our food information system this year has given us the ability to collect and provide

moredetail to our guests. This year, we have increased the collection of data on the ingredients within the drinks we

sell. The risk of a guest suffering an allergic reaction remains significant because of the wide variety of food items we

source, and levels of food allergies and intolerances amongst the public. When our systems or practices are found to

be at fault, we confront any failing honestly, learn and build better safeguards for the future.

Linked opportunity

In a competitive marketplace there is an opportunity to build

a reputation for absolute commitment to guest care and

building long-term trust.

Risk and risk management continued

Our principal risks and uncertainties

48 Marston’s PLC Annual Report and Accounts 2023

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7. INFORMATION TECHNOLOGY Link to strategy:

Potential impact Risk context Risk description Mitigation

• Reduction in the effectiveness of

operations, business interruption and loss

of profit.

• Regulatory fines because of the loss

ofdata.

• Reputational damage due to a loss

ofdata.

• The uninterrupted operation of our

business depends upon the IT network to

communicate, serve our guests, place

orders with suppliers, process

transactions and report on results.

• The performance of our business is

dependent upon the uninterrupted

running of our IT network, site links and

the internet.

• The cyber threat has increased in recent

years, targeting vulnerable businesses

with data theft, data encryption, denial

of service and fraud.

• Marston’s handles the personal contact

details of many of its guests who opt to

use the Wi-Fi in pub, or sign up to receive

marketing emails from us.

• 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.

• The risk extends to the companies that

we share data with for processing or

storage on our behalf.

• Anti-virus and firewall protection.

• Access control, password protection and

ITpolicy adherence.

• Network and device controls and

monitoring.

• Penetration testing and remediation.

• Cyber defence testing.

• Backup procedures.

• Data recovery plans and rehearsals.

• Raising employee awareness of IT security

through regular and engaging training

exercises.

• Data security policies, processes and

training.

• Data breach incident response plan and

scenario training.

Risk movement – No change

Global cyber risk has evolved in recent years, particularly the exploitation of more vulnerable companies that have

ahigh sensitivity to disruption such as food suppliers. The cyber threat has increased however, the tools we deploy to

maintain the security of our systems keep this risk at an acceptable level.

Linked opportunity

Our digital engagement with guests is greatly valued by them,

whether booking a table or a room, receiving offers byemail

or ordering a meal. Keeping our guests’ trust allows us to take

advantage of these tools and be able to utilise new digital

tools to engage and market our business. Our processes are

continually enhanced by new technology to analyse and

process sales data, team planning, recruitment, concessions

and food information.

Risk and risk management continued

Our principal risks and uncertainties

49Marston’s PLC Annual Report and Accounts 2023

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8. PANDEMIC Link to strategy:

Potential impact Risk context Risk description Mitigation

• Pubs close or trading is severely restricted.

• Operating procedures configured to

provide safety to our employees.

• Fewer guests and shorter stays.

• Increased operating costs.

• Although the COVID-19 pandemic is

broadly over, there is a possibility that

another form of pandemic will occur

inthe future. The severity of such a

pandemic upon human health, and the

duration and impact of measures taken

to reduce the circulation of infection, are

difficult to predict. The risk of pandemic in

the short term is deemed low; however,

we recognise that this risk has the singular

capability to close pubs nationally.

• Future restrictions on trade, as a result of

regulations imposed to reduce infection

rates, and public confidence in mixing

socially in public places.

• Alertness and readiness to implement

Government advice.

• Periodically auditing our crisis response

planning.

• Reviewing our ability to adapt our pubs for

social distancing, if required to do so.

• Preplanned training to roll out to our teams.

• Contingency plans for future lockdowns.

• Ability to simplify and streamline menus.

• Regular scrutiny of asset values.

Risk movement – No change

Pandemic remains a risk to our business.

Linked opportunity

The last lockdown demonstrated that pubs are greatly

missedwhen closed, highlighting their importance for social

interaction and leisure. Pubs local to people’s homes benefit

from an increase in spend as people tend to travel

shorterdistances.

Risk and risk management continued

Our principal risks and uncertainties

50 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Risk and risk management continued

Our levels of defence

1. Management ownership of risk

and control

Marston’s operates within a clear set of

policies approved by the Risk & Compliance

Committee with authority from the Executive

Committee. Adherence to these policies

governs the parameters within which

thebusiness is prepared to operate and

acceptrisk. Changes to policies occur at

theinstigation of management, in response

to new threats, new legislation or new

opportunities. This system of governance is

approved by the Board, allowing authority

tobe delegated through the business to

ensure that management is empowered

tooperate effectively.

Our managers are responsible for

identifying risks, monitoring them and

designing the control environment

necessary to mitigate them to a level within

the tolerance for the business. The degree

of risk acceptable is managed by the

Executive Committee with an implicit

understanding of the Board’s appetite for

risk. Authority levels are set with the

approval of the Executive Committee and,

ultimately, the Board and are aligned with

levels of management and the

expecteddegree of responsibility

theyhavefor managing risks.

A record of the key controls is maintained

within our corporate risk register. The owners

of each risk assess the effectiveness of these

controls, and this information is collected

byour internal audit team and reported

tothe Board annually. Internal audit

testingisperformed on key controls

togainsufficientassurance on

theireffectiveness.

Control systems are designed to manage

rather than eliminate risk and provide only a

reasonable and not absolute defence

against material errors, losses, fraud or

breaches of the law.

2. Committee oversight

The Executive Committee meets regularly

toconsider how to implement the actions

required to achieve business objectives,

andto monitor risks and opportunities.

TheCommittee takes ownership of the

implementation of the business strategy,

theoperation of the business to meet

operational and financial targets, and the

design of internal controls to reduce risks,

within its understanding of the Board’s

appetite for risk. It is management’s

responsibility to collect information to

measure the control of risk andreport this to

the Executive Committee, to ensure that the

business is operating within its risk appetite.

Management considers, communicates and

implements the decisions taken on risk made

by the Board and the Executive Committee,

regularly reporting onthe impact of those

decisions. Within our management structure

we operate several committees to focus

attention upon areas of risk that require

particular attention by senior management.

The key objectives of each committee are

outlined on page 52.

3. Assurance governance

The Risk team comprises the Director

ofCorporate Risk and the internal audit

function. Reporting to the General Counsel

& Company Secretary, the team can elevate

matters regarding risk where appropriate to

the Executive Committee and the Board.

The key features of the internal control

system are:

• A clearly defined management structure

operating within a framework of policies

and procedures covering authority levels,

responsibilities and accountabilities.

Policies are communicated to the

appropriate employees on induction and

kept accessible via a digital handbook.

The policies are reviewed, updated and

communicated as and when required.

• Risk management embedded into

day-to-day activities.

• Ensuring that our operations abide by all

applicable laws and regulations.

• Continual improvement by reporting on

effectiveness, recognition of weaknesses,

additional investment and by encouraging

the achievement of controls.

• A detailed formal budgeting process for

all activities; annual budget and

projections for future years formally

approved by the Board.

• Established procedures for planning,

approving and monitoring capital

expenditure, and major projects,

designed within a sound framework of

risk management.

• Board approval requirement for all major

investment, divestment and strategic

plans and programmes.

At each of their meetings the Board reviews

financial and non-financial progress

towards the strategic goals.

The Director of Corporate Risk attends the

Audit Committee meetings and can raise

any concerns regarding risks independently

to that Committee.

Enterprise Risk Management (ERM)

The ERM process is designed to identify,

monitor and report onrisks which could

impact on our ability toachieve our

strategic objectives. The keyrisks and

controls are recorded in our Corporate Risk

risk and its control is discussed and recorded

during meetings with the relevant and

responsible managers.

The Corporate Risk Register is shared,

through a portal on the Company’s

network, with managers to keep it current

and relevant. We use common risk

management language to facilitate cross

functional consistency and measurement

across the business. The Register helps

inform which risks require internal audit

testing to gather additional assurance.

The Register also provides a basis for

determining which risksrequire insurance

cover. The levels ofinsurance acquired are

managed by the Director of Corporate

Riskwith the authority of the Board and

inconsultation with external advisers.

Theselevels are considered in the context

ofchanging risks, external threats and the

cost of insurance.

51Marston’s PLC Annual Report and Accounts 2023

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Business Continuity Committee Data Security Committee Risk & Compliance Committee

Chaired by the Director ofCorporate Risk Chaired by the Director ofCorporate Risk Chaired by the General Counsel & Company Secretary

• The Committee considers and reviews the resilience ofthe

business to events outside of its control, and thelessons

learned from anyactual incidents or scenario testing.

• It considers threats to continuous operations, including

thoseevents with a very low probability but that would

havea very high impact, and the plansin place to respond

tosuch events.

• Consideration is given to the resilience of our supply chain,

and our suppliers’ own planning, as well as our ability to seek

alternative supplies at short notice.

• The Committee is briefed on IT resilience, its protection from

interference and its recovery plans.

• Members of theCommittee reflect theareas of significant

riskregarding the loss of personal and commercial data. This

includes employee data, guest data, marketing data, pub

and lodge operations data.

• Our Data Security Policy and management processes,

particularly ourdefence against a data breach, are

maintained to achieve legal compliance, but also to

operate in a responsible manner recognising the importance

to individuals.

• All employees receive data security training on induction

and at appropriate regular intervals. Data security guidance

is always available to our employees.

• Our data security Incident Response Plan is practised

toguarantee an effective response to any breach.

• The Committee reviews the identification of the principal

risksand considers the alignment of internal audit testing

tothose risks.

• It conducts a deeper review of areas where risks are more

challenging or changing significantly, including environmental

and climate-related risk and the plan for Net Zero. The

Committee tracks the emergence of new legislation and

monitors the potential impact on the business and its

preparation for compliance.

• New policies are reviewed bythe Committee before

submission for approval by the ExecutiveCommittee.

Internal Audit

The internal audit function is managed by

the Director of Corporate Risk ensuring it is

independent from the operations of the

business and from other teams. Internal

audit strategy is risk based and testing is

focused on the most significant risks tothe

business. The strategy has been approved

by the Audit Committee andaims to

provide a sufficient level of assurance

regarding the strength of the control

environment as well as supporting continual

improvement in risk management.

The internal audit plan is produced

annuallyand takes into consideration

thekey risks within the business and areas

ofincreased risk and the regularity of

thetesting. The plan is developed in

consultation with the Executive Committee

and the Risk & Compliance Committee,

considering areas requiring additional

assurance particularly for emerging risks.

4. Strategic

The Executive Committee monitors

performance againstkey performance

indicators to gauge progress against the

strategic objectives. The Executive

Committee alsooversees risks to the

strategy and the actions taken by

management to control and mitigate

thoserisks.

5. Board and Audit Committee

The Board is ultimately responsible for the

governance framework, internal control

and risk management. The mitigation of risk

is delegated to the Executive Committee.

The Board is responsible for ensuring that

management reviews and reports on the

effectiveness of the internal controls. The

Board is also responsible for understanding

the nature and extent of the principal risks,

formulating its risk appetite and the Viability

statement (found on the following page).

Where necessary, resource and expertise

are sought from an external internal audit

co-source for individual projects, for

example, those associated with higher risks

or which require specialist skills.

The budget for internal audit is submitted

annually for approval by the Executive

Committee and the Audit Committee.

Internal audit projects are planned with

theassistance of senior management and

the results are reported to the business,

theRisk & Compliance Committee and

theAudit Committee.

Our profit protection and stock validation

teams visit individual pubs and test the

financial controls, using data analysis to

identify sites of concern. The team actively

search for theft, fraud and misreporting of

transactions. Test results are communicated

to the operational managers to act upon,

and follow-up audits are arranged if

necessary to confirm improvements.

Reports from senior management to the

Board provide sufficient detail to assess risk

appetite in the context of the risks and

opportunities, and to make informed

decisions to accomplish the strategic

objectives. During the year, the Board has

robustly assessed the risks and opportunities

faced by the business, and considered the

ability of the business toachieve its strategic

objectives and theimpact of emerging

legislation. NewNon-executive Directors,

through inductions, are given the opportunity

to understand the challenges faced by the

business, risks and the controls and

processesoperated.

Risk and risk management continued

Our levels of defence

52 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Risk and risk management continued

Viability statement

In accordance with provision 31 of the

UKCorporate Governance Code 2018,

the Directors confirm that they have a

reasonable expectation that the Group

will continue to operate and meet its

liabilities, as they fall due, for the next

three years. Consistent with the previous

year, three years continues to be

adopted as an appropriate period of

assessment as it aligns with the Group’s

planning horizon in a fast-moving market

subject to changing consumer tastes in

addition to economic and political

uncertainties and is supported by

forecasts as approved by the Board.

Italso aligns with the Group’s capital

investment plans and gives a greater

degree of certainty over the forecasting

assumptions used.

The Directors’ assessment has been

made with reference to the Group’s

current position, its financial plan and

financial planning process, comprising

adetailed forecast for the next financial

year, together with a projection for the

following two financial years. The plan

also reflects the Group’s principal risks

and uncertainties set out on pages

43–50, specifically Economic and

political (risk 1), Market and operational/

guest sentiment (risk 2), Liquidity (risk 3),

and Financial covenants, pension fund

deficit and accounting controls (risk 4).

To assess the impact of the Group’s

principal risks and uncertainties on its

long-term viability, a severe but plausible

downside scenario was applied to the

Group’s financial forecasts in the form of

reduced sales, with variable costs moving in

line with the change in sales volumes. It is

assumed that the Group’s financial plans

would be adjusted in response to each

scenario by reviewing controllable and

discretionary costs alongside capital

investment.

The principal risks currently facing the

business relate to the continued uncertainty

surrounding the political and economic

environment including the cost-of-living

crisis, specifically Economic and political

(risk1) and Market and operational/guest

sentiment (risk 2). The Group has reviewed

this in the forecast scenarios and sensitivities

by incorporating a reduction in sales

(downside scenario). Whilst the experience

of the cost-of-living crisis could be expected

to lead to lasting changes in both consumer

behaviour and competition in the hospitality

sector, in making this assessment the Group

has taken the view that any adverse impact

on sales, caused by reduced visits due to

thecost-of-living crisis will be temporary

innature and should not extend to any

material extent into the future. Pubs

havebeen resilient in previous economic

downturns and offer value to the consumer.

Liquidity (risk 3) and Financial covenants

(part of risk 4), for both secured debt and

unsecured facilities, are assessed in the

forecasts and in the severe but plausible

downside case the Group would be

required to seek an amendment to the

Interest Cover covenant for its banking

facility and private placement. Whilst

thereis no certainty that any required

amendments would be granted (which has

been disclosed as a material uncertainty

over going concern in the financial

statements), given our experiences to date

we are confident of securing this where

necessary. In all scenarios the Group

continues to remain profitable with

adequate liquidity.

In the forecasted period the Group is

required to refinance its unsecured facility

by January 2025, and it has been assumed

that this would be on a similar basis. Whilst

there is no certainty since it requires the

agreement of its lenders, based on the

successful amend and extend to the RCF

and private placement during the period

and the continued positive relationships, the

Directors believe they will be able to secure

any such financing required.

In terms of resilience, the forecast

considers the Economic and political risk

(risk 1) and Market and operational/guest

sentiment risk (risk 2), focusing on the

impact on sales with a reduction in

turnover from fewer guest visits alongside

increasing costs from inflationary

pressures, interest rate rises and

regulatory changes. The forecasts

considered market insight and trends

based on changing consumer behaviour

and therefore considered the allocation

of capital to adapt to these trends.

In making this statement, the Directors

carried out a robust assessment of the

principal risks and uncertainties facing

the Group, including those that would

threaten its business model, future

performance, solvency, or liquidity.

Principal risks and uncertainties set out

on pages 43–50 are the result of internal

risk management and control processes,

with further details set out in the Audit

Committee’s report on pages 67–71.

53Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

William Rucker

Chair

Chair’s introduction to Corporate Governance report

On behalf of the Board, I am pleased

topresent our Governance Report for

thefinancial year 2022/23. This report sets

outourapproach to good corporate

governance and describes the key

elementsof our governance structure.

Notwithstanding the impact of inflation

andinterest rates this year, Marston’s has

maintained momentum in delivering its

strategic priorities. The foundations of

ourgood corporate governance structure

are delivered through strong leadership

atBoard level and continue toprovide

structure and stability in challenging times.

Culture and purpose

The Board is responsible for setting the

Company’s values and ensuring that they

are aligned with our culture. This year, we

further developed our People Promise

‘Marston’s: where people make pubs’ to

capture the essence of Marston’s. The

People Promise was reviewed by the Board

during the year and further details can be

found on page 58. The people at Marston’s

are responsible for delivering our purpose of

bringing people together to create happy,

memorable, meaningful experiences and

our People Promise is a key part of how we

do this.

Board composition and changes

Following the announcement on

17November 2023, Andrew Andrea has

steppeddown as Chief Executive Officer,

and,following a rigorous external search,

Iam pleased to announce that Justin Platt

has been appointed as the new Chief

Executive Officer with effect from

10January 2024. Andrew will be

availablefor a periodto ensure a smooth

handover of responsibilities and duties and

Iwill support the management transition in

the short interim period before Justin joins

the business, with the Executive team

reporting directly to me. We are grateful to

Andrew for his significant commitment and

contribution to the Company during his

career, which extends over 20 years.

As highlighted in the Audit Committee report,

this year the Board has recommended the

appointment of new auditors, subject to

shareholder approval. Following the

announcement in November, Matthew

Roberts has indicated to the Boardthat he

feels it is an appropriate time to refresh the

role of Audit Chair and willbe stepping down

with effect from the conclusion of the 2023

AGM and, following arigorous external

search, Rachel Osborne will join the Board

and be appointed as Chair of the Audit

Committee from the samedate.

Matthew has made an enormous

contribution to the Board during his tenure,

and I would like to take this opportunity to

thank him for his valued service.

Details of the external recruitment processes

undertaken can be found on page 64 and

biographies and summaries of experience

for Justin Platt and Rachel can be found on

page 57 and in the 2024 Notice of Meeting.

Board effectiveness

This year we carried out an external

evaluation of the effectiveness of the

Boardand its Committees, facilitated by

Trusted Advisors Partnership. The review

concluded that the Board continues

tooperate effectively, with some

recommendations for improvement.

Furtherdetails are set out on page 66.

Sustainability

The Company has continued to make

progress towards our sustainability goals

with support from the ‘Doing more to be

proud of’ taskforce. This year the Board

approved the Company’s inaugural Insight

Report which shines a light on our focus

areas, targets and opportunities for

improvement. A copy of the Insight Report is

available at www.marstonspubs.co.uk.

Governance and reporting

Our governance framework provides

long-term value creation and ensures we

adopt corporate governance principles in a

way that is relevant to our business, supports

our strategy and goals and is consistent with

our values. I invite you to review the following

pages, which set out how we have complied

with the UK Corporate Governance Code

(2018) (‘the 2018 Code’) and how our

governance framework helps to support the

Company’s strategic priorities. The section

172(1) statement on page 16 describes how

the Board has fulfilled its statutory duties

under the Companies Act 2006 and how the

Board has engaged with our different

stakeholder groups this year.

The 2018 Code has applied throughout the

reporting period and the Board considers

that we have fully complied with the

principles and provisions of the Code.

Reports from the Nomination, Audit and

Remuneration Committee can be found

from page 63.

Coninued focus

54 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Board gender diversity

Female

Male

43%

57%

Tenure of Chair and

Non-executive Directors

0–3 years

3–6 years

6+ years

Balance between Executive

& Non-executive Directors

Chair

Executive Directors

Non-executive Directors

Chair’s introduction to Corporate Governance report continued

UK Corporate Governance Code compliance statement

The 2018 Code applied to the 2022/23 reporting period. The 2018 Code is available on

the Financial Reporting Council’s website: www.frc.org.uk

The Company was compliant with the principles and provisions of the 2018 Code

throughout the reporting period under review. Our Governance Report explains how

we have applied the main principles and, where applicable, provisions of the 2018

Code, through our governance framework, supporting procedures and the work of

the Board, its Committees and management. In order to provide a more accessible

report, and to avoid repetition, more information can be found on our website:

1. Board leadership and Company purpose

How we engage with our people and our shareholders and what has been on the

Board’s agenda this year.

READ MORE ON PAGES 72 TO 86

55Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Board of Directors

An experienced Board

Board committees:

Audit Committee

Remuneration Committee

Nomination Committee

Denotes Committee Chair

Terms of reference for each Committee are

availableon the Sustainability section of our website:

www.marstonspubs.co.uk

William Rucker

Non-executive Chair

Justin Platt

Chief Executive Officer Designate

Hayleigh Lupino

Chief Financial Officer (CFO)

Octavia Morley

Senior Independent Director

Appointed:

October 2018,

independentonappointment

A Chartered Accountant with extensive experience

in banking and financial services, William is currently

Chair at ICG PLC, and Chair of the UK Dementia

Research Institute. William’s City and financial

experience brings a wealth of knowledge and

experience of financial markets, corporate finance

and strategy to his leadership of the Board.

Past experience:

• Chair of Lazard UK

• Chair of Crest Nicholson Holdings plc

• Chair of Quintain Estates and Developments

• Non-executive Director of Rentokil Initial plc

Appointed: with effect from January 2024

Justin’s appointment was announced in November

2023, effective from 10 January 2024. Justin has over 30

years’ experience in hospitality and consumer-facing

businesses, having spent the last 12 years at Merlin

Entertainments, most recently as Chief Strategy Officer

and prior to that in a variety of operational leadership

roles. Justin has a proven track record of delivering

sustainable business growth through his clarity of

strategic focus, a passion for enhancing customer

experiences and a relentless focus on business results

delivery. Justin’s combination of operational and

strategic experience in multi-site leisure businesses

equips him perfectly to lead Marston’s through the

next phase of its development.

Past experience:

• Chief Strategy Officer at Merlin Entertainments

• Managing Director at Resort Theme Parks

• Global Marketing Director at AstraZeneca plc

Appointed: October 2021

Hayleigh was appointed CFO in 2021, having

previously been Director of Group Finance, and

previously held a number of senior roles at Marston’s.

Hayleigh has strong operational and commercial

credentials, as well as extensive knowledge of both

Marston’s and the wider pub and brewing sector.

Herexperience as a qualified chartered accountant

played a pivotal role in creating the partnership

between Marston’s Beer Company and Carlsberg UK

in 2020. She is currently a Non-Executive Director of

CMBC and also a Trustee Board Director at the

Wolverhampton Grand Theatre.

Past experience:

• Senior roles held within Marston’s PLC

Appointed: January 2020

Octavia is currently Senior Independent Director

atCrest Nicholson Holdings PLC, Non-executive

Director at Ascensos Ltd and Chair of Banner Group.

She has extensive experience in both executive

andnon-executive roles in retail and multisite

companies, having held various senior operational

and strategic roles across areas of retail.

Past experience:

• Senior Independent Director

atCardFactoryPLC

• Executive and Non-executive Chair ofSpicers

Office Team Group Ltd

• Non-executive Director of John Menzies PLC

• Chief Executive Officer, then Chair, at

LighterLife UK Limited

• Managing Director at Crew Clothing Co Ltd

• Chief Executive at OKA Direct Limited

N A N R

Board skills:

Consumer/Retail

Hospitality

Commercial property

People

Finance

Marketing

Digital

56 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Board of Directors continued

Board committees:

Audit Committee

Remuneration Committee

Nomination Committee

Denotes Committee Chair

Terms of reference for each Committee are

availableon the Sustainability section of our website:

www.marstonspubs.co.uk

Bridget Lea

Independent Non-executive Director

Matthew Roberts

Independent Non-executive Director

Sir Nick Varney

Independent Non-executive Director

Bethan Raybould

General Counsel & Company Secretary

Appointed:

September 2019

Bridget is due to commence her new role as UK

General Manager of Snap Inc in January 2024. She

is currently Managing Director (Commercial) at BT

Group having previously held the role of Managing

Director (North) at J Sainsbury plc and also sits on

the Board of Governors at Manchester Metropolitan

University. Bridget has had a distinguished career

working across multiple leading retail brands and

held senior positions, spanning a wide range of

disciplines including sales, operations, property,

marketing, supply chain and digital within retail

corporates. Bridget is also our designated

Non-executive Director responsible for

workforceengagement.

Past experience:

• Managing Director (North) at J Sainsbury plc

• Director of Stores, Online and Omnichannel

atO2

Appointed: March 2017

Matthew has significant real estate and retail

experience having previously been CFO and then

CEO of Intu Properties plc, until June 2020. Matthew

is a qualified Chartered Accountant (FCA) and has

relevant financial experience, enabling him to

contribute effectively to the Group as the Chair

ofthe Audit Committee. He is also a trustee at

Charitable Giving. Matthew has indicated that he

does not intend to stand for re-election at the

2024AGM.

Past experience:

• Chief Executive Officer and Chief Financial

Officer of Intu Properties plc

• Chief Financial Officer of Gala Coral

GroupLimited

• Finance Director of Debenhams plc

Appointed: July 2022

Sir Nick has over 30 years’ experience in the

leisuresector, having started his career in consumer

goods marketing with Nestlé Rowntree and then

with Reckitt & Colman plc. He recently retired

asCEO of Merlin Entertainments. Sir Nick is also

aNon-executive Chair at Bath Rugby and a

SeniorAdviser at Blackstone.

Past experience:

• Chief Executive Officer of Merlin Entertainments

• Managing Director at Vardon Attractions,

Vardon plc

• Marketing Director at The Tussauds Group

• Board member of UK Hospitality

Appointed: February 2022

Bethan joined the Company in 2013 as in-house

lawyer and was appointed General Counsel &

Company Secretary in February 2022. She is

responsible for managing legal risk and supporting

theChair and the Board in maintaining high standards

of corporate governance. Bethan is also responsible

for the legal, safety, internal audit and risk functions

atMarston’s. Bethan is a senior solicitor with over

15years’ experience in both private practice and

in-house roles.

Changes to the Board ofDirectors

1. Andrew Andrea stepped down from the Board

and as CEO on 17 November 2023.

2. Rachel Osborne has been appointed to the Board

as Non-executive Director and Chair of the Audit

Committee with effect from 23January 2024.

Rachel is currently a Non-Executive Director and

Chair of Audit Committee at Ocado PLC and

brings a wealth of recent and relevant financial,

consumer and retail experience to the Board.

A N N NR R RA

Board skills:

Consumer/Retail

Hospitality

Commercial property

People

Finance

Marketing

Digital

57Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report

Board leadership and Company purpose

Company purpose

The Board is responsible for promoting

thelong-term sustainable success of the

Company, establishing and supporting the

delivery of the Company’s vision of ‘Pubs to

be proud of’ through defined goals and

measurable targets. It does this in a number

of ways including: the continuous monitoring

of key performance indicators, evaluating

whether strategic actions proposed by

management support the business model

objectives, a regular assessment ofindustry

trends and consumer insight.

Culture

The Board is responsible for setting the

Company’s values and ensuring that

theyare aligned with our culture. This is

continuously monitored and the Board

assesses the special culture at Marston’s

and is pleased that it reflects our purpose

and values, all of which are, in turn, aligned

to our strategy. In particular, during

financial year 2022/23, the Board:

• Scrutinised trends through reports from

the HR Director and senior management,

and participated in direct employee

engagement, as well as workforce

engagement activities led by Bridget Lea

(our DNED), all as described on page 17.

• Monitored the implementation of the

Company’s behavioural framework

which sets out the behaviours expected

of our people and which is directly

aligned to the Company’s values and

purpose, thereby helping to promote

and embody our culture through our

ways of working. The Executive

Committee and senior management

lead by example through setting the

tone from the top, acting in accordance

with and role modelling the behavioural

framework at all times.

• Approved the People Promise. This is an

articulation of our vision of Pubs to be

proud of, for our people. Underpinned by

our values and behavioural framework,

our People Promise enunciates our

culture and reflects what it means to be

part of Marston’s.

• Reviewed KPIs. Several of our KPIs, such

as the employee engagement and EHO

scores, allow trends in the Company’s

culture to be continuously monitored.

The Directors receive and review monthly

management information packs which

include a KPI report and these are

supported by regular presentations by

Executive Committee and workforce

engagement activities.

• Ensuring on an ongoing basis that our

policies and practices are aligned.

TheBoard plays a key role in helping

toensure that policies and practices

proposed by management, particularly

relating to pay, bonuses and fair working

practices, are consistent with the

Company’s values and support long-

term sustainable success. Further detail

on the alignment of our bonus scheme

toour values and KPIs (which include

employee engagement) is set out in the

Directors’ Remuneration report on

page72.

Engaging with our stakeholders

Our Section 172(1) statement on page 16

describes our key stakeholder groups,

details how their views are considered and

how the Board has engaged with different

stakeholders during the year. This year, we

reviewed and evolved our board-level

workforce engagement which is the

responsibility of Bridget Lea, our DNED,

toensure alignment with our maturing

employee engagement mechanism. More

information can be found in the Section

172(1) statement.

2024 Annual General Meeting (AGM)

The 2024 AGM will be held at The

Farmhouseat Mackworth in Derby on

Tuesday 23 January. More information on

how shareholders can register their intention

to attend, and submit any questions in

advance of the meeting, can be found on

page 90 and in the 2024 Notice of Meeting.

The Board looks forward to meeting and

engaging with shareholders once again.

Annual Report and Accounts

The Annual Report and Accounts is the

main tool for providing a comprehensive

review of the business, details of our

governance framework in action and

annual results. This year, mindful of our

sustainability agenda, increased cost and

the desire to reduce our dependency on

natural resources, we have focused our

efforts on the online version of the Annual

Report and Accounts, reducing the number

of printed copies to ensure minimal waste

after fulfilling the requirements of our

shareholders who still require printed copies.

58 Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Board leadership and Company purpose

Board agenda and activities

duringthe year

Over the course of the year, the Board met

seven times for scheduled meetings, the

majority of those meetings held in person

andone unscheduled meeting held online.

Unscheduled meetings are usually to discuss

matters of a transactional nature that arise

outside of the forward agenda or Board

calendar. Attendance at Board and Board

Committee meetings is set out below. At least

two of those meetings (one of which includes

the Board strategy session), are 2-day

meetings comprising one ‘day in trade’

andone day reserved for the Board

meeting,but held in one of our pubs.

As well as giving the Board a deeper

understanding of the business, our employees

and Pub Partners have the opportunity to

engage with the Board in an informal setting.

We rotate the location of these meetings

each year and, this year, the Board visited

across section of our pubs in Yorkshire

andDerbyshire.

On the Board agenda

The Board agenda is prepared in advance

of each meeting, alongside a 12-month

rolling forward agenda which is arranged by

theme. The agenda for each Board and

Committee meeting provides a framework

for discussions aligned to the Company’s

strategy and objectives.

The CEO and CFO provide a report for each

meeting, providing an analysis of key

business matters, together with supporting

reports from the Executive Committee and

management as required, including reports

on financial and banking matters,

operational performance, people and

engagement updates, stakeholder

engagement and shareholder analysis.

Atthe end of each period (monthly),

theBoard is also provided with a detailed

management information pack which

reports on KPIs, capital returns as well as

financial performance.

Time is also made available on the agenda

for presentations by management and

advisers and any additional items that

require the Board’s scrutiny or approval in

the course of a year.

The Board also approved a number

ofwritten resolutions during the year in

linewith the Board’s terms of reference.

Thiswas due to the timing of approvals

required outside of the normal Board

meeting calendar.

During the year, the Board also received

several presentations from the Leadership

Group, including Marston’s Diversity

&Inclusion Strategy and category

management.

These presentations are lessformal and are

typically coupled with adinner at one of

our pubs, giving the Boardan opportunity

to engage with the Leadership Group and

their direct reports ina more relaxed setting.

Key items on the Board agenda this year included:

Strategy Finance

People, culture and

diversityand inclusion ESG, governance and risk

• Debating strategy

development

• IR considerations

• Overseeing stakeholder

communications

• Updates on performance of

the business and alignment

tostrategic pillars

• Property disposals in line

withstrategy

• Operational matters

including digital strategy and

drink strategy implementation

• Assessing long-term financial

planning, debt structure and

budgeting in the context of the

challenging trading

environment

• Refinancing considerations

• External audit tender

• Financial statements and

trading updates

• Budget approval for 2023/24

• Diversity and inclusion strategy

• Board-level workforce

engagement

• Employee engagement survey

results and analysis of trends

and culture

• Gender Pay Gap reporting

• Succession planning

• People Promise

• EHO presentation

• Doing more to be proud of

initiative updates

• Approval of the Insight Report

• Approval of the TCFD report

• Modern Slavery statement

• Approval of Committee Terms

of Reference and Matters

Reserved for the Board

• External Board evaluation

More detail on the Board’s discussions and the impact on our stakeholders can be found on page 16.

59Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Board leadership and Company purpose

Strategy day

Each year, the Board attends a two-day strategy meeting with the Executive Committee in

attendance, to monitor andreview performance against our corebusiness objectives and

refine the Company’s strategic direction in pursuit ofvalue creation. In June 2023, the Board

met in Sheffield at one of our Signature pubs: day one comprised of a day in trade with the

whole Board visiting a broad cross section of our pubs in Yorkshire andday two was reserved

forthe core businessmeeting. The Company’s brokers joined us for dinner and presented

ananalysis of shareholder sentiment and abroader market analysis.

The matters discussed by the Board included:

• a strategic estate review of our portfolio;

• development of the franchise-style partnerships model;

• review of business strategy to determine how sales and profit can be maximised and

business operations made more efficient;

• assessment of the macro-environment and the consumer trend analysis;

• five-year financial plan;

• succession planning and our talent pipeline.

The conclusions from this year’s strategy day are summarised in the Strategic report. In the

forthcoming financial year, the strategy day will continue in the same format. Following a

review of the meeting, the Board was in agreement that the format and scope worked well

and helped improve overall Board effectiveness.

Board and committee attendance

The Directors’ attendance at the seven scheduled meetings is set out below. Sufficient

timeis also allocated periodically, for the Chair to meet privately with the SID and NEDs

todiscuss any matters arising, as well as for the SID and NEDs to meet without the Chair

being present.

More information on Board activities can be found on page 58.

Board member Board

Audit

Committee

Nomination

Committee

Remuneration

Committee

Andrew Andrea 7/7 – – –

Bridget Lea 7/7 4/4 2/2 5/5

Hayleigh Lupino 7/7 – – –

Octavia Morley 7/7 4/4 2/2 5/5

Matthew Roberts 7/7 4/4 2/2 5/5

William Rucker 7/7 – 2/2 –

Nick Varney 7/7 – 2/2 5/5

Conflicts of interest

Upon appointment, each of the Non-executive Directors confirms they have sufficient time

available to Marston’s to discharge their duties. Any additional Director roles are discussed

ahead of appointment. The Board remains confident that each Director has devoted

suitable time to undertake their responsibilities effectively.

Each Director is required to disclose, without delay, any situation that arises which may

result in a conflict or potential conflict of interest. The Board has a formal process in place

for disclosing and authorising any conflicts of interest, which is reviewed by the Board each

year. No changes were recorded during the year that would impact the independence of

any of our Directors.

60 Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Division of responsibilities

There is usually a clear division of

responsibilities between the Chair and the

Chief Executive Officer and a high-level

summary of each role appears below.

On17 November 2023, it was announced

Andrew Andrea had stepped down as

Chief Executive Officer, with his successor,

Justin Platt, due to join the Board on

10January 2024. As a temporary measure,

William Rucker, Chair, will support the

management transition in the short interim

period with the Executive team reporting

directly to him.

Chair is responsible for:

• leading the Board and ensuring its

effectiveness in directing the Company;

• setting the agenda for Board meetings

and ensuring the style and tone of

meetings enable constructive debate;

• supporting the CEO in articulating the

purpose, values and culture of the

Company;

• ensuring the Company has an effective

strategy and that there is a high-calibre

Chief Executive Officer with an executive

team able to implement the strategy;

• making sure the Company operates to a

high standard of corporate governance

in line with the governance framework.

Our governance framework (shown below) supports good governance practices across the Company.

The Board

Responsible for effective leadership by setting strategy and overseeing delivery in a way that delivers

long-termsustainablegrowthfor the benefit of the Company’s stakeholders

Supporting

Committees

Risk & Compliance

Business Continuity

Data Security

Treasury

Details of each

supporting committee

can be found

onpage 52

Principal Committees

Management

Committees

Executive Committee

Comprising the CEO,

CFO, two Pub

Operations Directors,

Commercial

Marketing Director, HR

Director and General

Counsel & Company

Secretary.

Disclosure Committee

Comprises CEO, CFO

and General Counsel

& Company Secretary

More details

onpage62

Roles and responsibilities

Assurance,

internal controls, audit,

legal, regulatory and

compliance

Matters reserved for the Board

Committee terms of reference

foreach committee available

onour website.

ESG:

‘Doing more to be

proud of’ Taskforce

More details can be

found on page 23

Implementation

ofstrategy

Monitoring

performance

Enterprise-wide risk management

andinternalcontrols

Our behaviours, value and culture

Audit

Responsible for

financial and risk

matters

Nomination

Responsible for

succession planning

and appointment

Remuneration

Responsible for

remuneration and

incentive schemes

61Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Division of responsibilities

Chief Executive Officer is responsible for:

• implementing the strategic objectives

setand agreed by the Board;

• providing clear and visible leadership,

demonstrating the values and ways of

working that reflect the Company’s

culture;

• leading the Executive Committee and

senior management in managing the

business;

• reporting to the Board on all material

matters affecting the Company and its

performance;

• ensuring the Board is aware of investor

and stakeholder views.

Further details of the roles and

responsibilities of each Director and the

General Counsel &Company Secretary

areavailable on ourwebsite.

Our governance framework provides

astructure of effective management

andcontrols to measure and assess

performance and risk. It also facilitates

thesharing of information by encouraging

strategic debate and informed and timely

decision-making. The framework is regularly

reviewed, and the Board believes the

current framework helps ensure we adopt

corporate governance principles in a way

that is relevant to our business (including

appropriate delegation), supports our

strategy and is consistent with our values.

The three principal Committees of the

Board deal with financial and risk matters,

succession planning and remuneration.

Each has its own terms of reference which

are reviewed annually before they are

considered and approved by the Board.

The Executive Committee meets informally

every Monday morning to discuss sales and

performance from the previous week and

any key matters arising for the week ahead.

On a more formal basis, the Executive

Committee meet at least nine times a year to

discuss implementation of strategy, consumer

outlook, stakeholder feedback (particularly

guest and employee through Reputation

andYour Voice respectively), performance

and other matters reserved for management.

Regular reports are provided to the Executive

Committee by the Leadership Group,

including Health & Safety, capital returns

andperformance against KPIs. An agenda

isprepared ahead of each meeting and

arolling 12-month forward agenda is

maintained. Unscheduled ‘Pulse Exec’

meetings are called from time to time to

discuss specific matters arising. Every Board

pack includes the minutes of the prior

meeting of the Executive Committee.

The Disclosure Committee meets as and

when required to discuss matters arising

inaccordance with the UK Market Abuse

Regulation, the Financial Conduct Authority

(FCA) Listing Rules and the Disclosure

Guidance and Transparency Rules to

ensurethe Company meets its obligations.

The Supporting Committees’ primary role

isto provide assurance to the Board on the

operation of internal controls, auditing and

compliance with legal and other regulatory

obligations. This framework is supported and

enabled by the risk management process

and our behaviours.

62 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report continued

Nomination Committee report

Members

William Rucker (Chair)

Octavia Morley

Matthew Roberts

Bridget Lea

Nick Varney

Our responsibilities

• To monitor the composition of the

Board and its Committees, to ensure

the right balance of skills, experience

and knowledge.

• To consider the succession plans for

Directors and senior management,

taking into account the leadership,

skills, expertise and diversity needed

to meet the challenges and

opportunities facing the Company.

• To ensure the process for identifying

and recommending suitable

candidates for Executive and Non-

executive Director positions delivers

the desired outcomes.

The Committee met three times during

the year and all members attended all

meetings. Executive Directors, senior

management and external advisers may

be invited to attend from time to time.

Key activities during the

reporting year

• Led the recruitment and appointment

process for Justin Platt (CEO) and

Rachel Osborne (Audit Chair).

• Reviewed the structure, diversity, size

and composition of the Board and

considered Board succession

planning.

• Considered this year’s external Board

evaluation process.

• Reviewed succession plans for the

Executive Committee and the

Leadership Group, including receiving

an update on the talent pipeline.

• Reviewed the terms of reference and

effectiveness of the Nomination

Committee.

• Reviewed the independence,

contribution and time commitment

ofeach Director.

• Considered and approved each

Director standing for election or

re-election at the 2024 AGM.

DEAR SHAREHOLDER,

I am pleased to present the Nomination

Committee’s report and update on the

Committee’s activities during financial

year2022/23. The Committee member

attendance table is shown on page 60. In

addition to formal meetings during the year,

there were regular informal discussions on

diversity and inclusion, succession plans and

appointments at Leadership Group Level.

Succession planning

The Nomination Committee is responsible

for succession planning and ensuring a

diverse talent pipeline for the Board, the

Executive Committee and increasingly

theLeadership Group. I am pleased to

seethat the Company has capable and

committed leaders and invests in their

training and development.

Appointment to the Board

I would like to welcome Justin Platt to the

Board and management team as Chief

Executive Office and Rachel Osborne as a

Non-executive Director and Chair of the

Audit Committee. External consultants were

used to identify suitable candidates for

consideration by the Nomination

Committee and more details can be found

on page 64.

Board evaluation

As required by the 2018 Code, this year’s

Board evaluation was conducted by an

external adviser; the Trusted Advisor

Partnership. The process and outputs of the

evaluation are detailed in full on page 66.

William Rucker

Chair of the Nomination Committee

63Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Senior managers

(Executive Committee and Leadership Group)

Female

Male

46%

54%

Total employees

Female

Male

55.7%

44.3%

Corporate Governance report continued

Nomination Committee report

Diversity and Inclusion:

‘comeasyou are’

At Marston’s, we are committed to promoting

an inclusive environment that represents

many different backgrounds, cultures and

points of view, and strive toreflect the

communities we serve. Wesupport our

people to ‘come as you are’by building an

inclusive culture among our employees, our

Pub Partners and suppliers which reflects the

diversity of our guests andcommunities.

Our new Diversity and Inclusion strategy was

launched in 2023 and our objectives are for

everyone to:

• relate to, feel represented by, and trust

each other;

• feel valued and supported;

• feel involved in the bigger picture;

• be appreciated as individuals;

• communicate openly, have a voice, and

be listened to.

Accountability for Diversity and Inclusion

starts at the very top with our Inclusion

taskforce being chaired by Hayleigh Lupino,

our Chief Financial Officer.

More details of our Diversity and Inclusion

strategy can be found in our Insight Report

and our Policy is available on our website.

Equally, the Board believes a diverse and

inclusive workforce, and a culture where

people are empowered to ‘come as you

are’, arecrucial to the long-term success of

the Company.

All Board appointments are madeon

merit,inthe context of the individual’s

skills,experience and all aspects of

diversityandinclusion. The Nomination

Committee continues to appoint on

meritand experience, and will ensure,

whenrecruiting new Directors, that the

process includesa wide range of

candidatesfromallbackgrounds.

Although we do not set specific targets for

diversity, we satisfy the Parker Review (2017)

recommendations to have at least one Board

director from an ethnic minority background,

and at the financial year end three out of

seven of our Board directors were women.

Board appointments and

succession planning

The Nomination Committee is responsible

for the formal and transparent process

forall new appointments to the Board of

Directors. This process involves reviewing the

current composition of the Board, its skills

and experience and identifying any gaps.

This is reviewed on an annual basis through

a review of the Board’s effectiveness.

New appointment

The selection process for new appointments is

rigorous and transparent and the Nomination

Committee appoints external consultants to

identify suitable candidates that meet the

search criteria. The Chair is responsible for

providing a shortlist of candidates for

consideration by the Nomination Committee

which then makes its recommendation for

appointment to the Board. The Nomination

Committee is led by the SID when dealing

with the appointment of a successor to the

Board chair.

Appointment of Justin Platt CEO

The Board appointed Russell Reynolds

tocommence the search and assessmentof

candidates. Russell Reynolds is accredited

under The Enhanced Code of Conduct for

Executive Search Firms and used a range

ofsearch tools, including psychometric

analysisand a forensic assessment by an

organisational psychologist to assist the

Board by providing an independent view

ofcandidates’ leadership styles, skills, and

development needs.

The Board considered and prepared

abriefcovering the key attributes,

experience and personal traits

desirableinthe ideal candidate, then

agreed atimetabled approach before

thecommencement of a thorough and

extensive search. The Chair and the Chair

ofthe Remuneration Committee met

withRussell Reynolds to review a longlist

ofcandidates, before arriving at a shortlist

forall the NEDs to interview in person.

Havingdebated the relative merits of each

candidate and, with reference back to the

original brief, the Nomination Committee,

proposed to offer the position to Justin Platt,

noting especially the value of this combined

operational and strategic experience in

multisite leisure businesses. The Board

unanimously approved the proposal.

64 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Appointment of Rachel Osborne,

Non-executive Director and Chair of the

Audit Committee

The Board appointed Teneo to commence

the search, a global consultancy who

specialise in, and assisted us with, identifying

and securing high-calibre candidates from

adiverse pool to address the needs of

theBoard.

The role of Audit Committee Chair is vital

tothe overall effectiveness of the Board and

the Audit Committee and the search

specification, provided to Teneo by the

Chair,included effective leadership and

communication skills, as well as having a

clear understanding of the Audit Committee’s

duties and responsibilities, particularly in light

of the forthcoming audit and corporate

governance reforms.

A longlist of candidates was drawn up for

review and from this longlist, a number of

candidates were shortlisted for interview

bythe Chair, SID, CFO and the Company

Secretary. Having debated the relative

meritsof each candidate, the Nomination

Committee proposed to offer the position to

Rachel Osborne, noting especially the value

of her executive and non-executive

experience. The Board unanimously

approved the proposal.

Board support, inductions

andongoing development

On their appointment to the Board, all

newDirectors receive a comprehensive

induction programme co-ordinated by

theGeneral Counsel & Company Secretary.

The induction programme is tailored to

eachnew Director, depending on their

experience and expertise, and the role

theywill fulfil on the Company’s Board.

The detailed induction plan for Rachel

Osborne is being finalised and will comprise:

• introductory meetings with all key

stakeholders including the Director of

Corporate Risk, Director of Property,

Head of Financial Reporting and

members of theExecutive Committee;

• days in trade visiting a cross section

ofour pub estate;

• training on Director duties, including

Section 172(1), the Market Abuse

Regulation and the 2018 Code;

• cyber security training;

• detailed sessions on the Company’s

approach to the audit and corporate

governance reforms and any other

critical emerging legislation;

• deep dive sessions with management

onkey issues such as debt and capital

structure, principal and emerging risks

and related controls, whistleblowing,

ESGand property valuations;

• meeting the Company’s auditors and

other key advisers and stakeholders;

• access to and training on the Company’s

Board portal which includes past Board

packs and a comprehensive resources

section including material Board

documents and information on

thebusiness; and

• an information pack on the Company’s

policies, practices and corporate

governance framework.

The detailed induction plan for Justin Platt is

currently being designed by the HR Director

and will include:

• introductory meetings with all members

of the management team and their

direct reports and the Leadership Group;

• deep dive sessions with management on

key issues such as areas of strategic focus,

debt and capital structure and employee

and guest engagement mechanisms;

• days in trade visiting a cross section of

our pub estate;

• training in Director duties, including

Section 172(1), the Market Abuse

Regulation and the 2018 Code;

• cyber security training;

• meeting the Company’s key advisers

andstakeholders;

• access to and training on the Company’s

Board portal which includes past Board

packs and a comprehensive resources

section including material Board

documents and information on the

business; and

• an information pack on the Company’s

policies, practices and corporate

governance framework.

Individual training and development

needsare reviewed as part of the annual

Board evaluation process and training and

support are arranged by the General Counsel

& Company Secretary, where requested or

aneed is identified. If Directors deem it is

necessary to seek independent advice

aboutthe performance of their duties,

theyare entitled to do so at the Company’s

expense, and this is facilitated by the

GeneralCounsel & Company Secretary.

Election and re-elections

Matthew Roberts has decided not to stand

for re-election at the forthcoming AGM in

January 2024. All other Directors will offer

themselves for re-election or, in the case of

Justin Platt and Rachel Osborne, election for

the first time and details of each Director are

set out on pages 56 to 57 and in the Notice

of Meeting. The Board is of the opinion,

asrecommended by the Nomination

Committee, that each Director standing for

election or re-election makes an effective

and valuable contribution to the Company’s

long-term sustainable success.

Corporate Governance report continued

Nomination Committee report

65Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Nomination Committee report

Annual statement on Board and Executive Team diversity targets

Our Board and Executive Committee gender and ethnicity data is provided below as at

30September 2023, in accordance with UK Listing Rule 9.8.6R(10).

Diversity data is collected for the Executive Committee via employee engagement.

TheBoard were also asked to confirm which ethnicity category they identified with

inthetable below.

Number of

Board

members

Percentage

of the Board

Number

ofsenior

positions on

the Board

(CEO, CFO,

SID and

Chair)

Number in

Executive

Committee

Percentage

of Executive

Committee

Men 4 57% 2 3 43%

Women 3 43% 2 4 57%

Not specified/prefer not to say

Number of

board

members

Percentage

of the board

Number

ofsenior

positions on

the board

(CEO, CFO,

SID and

Chair)

Number in

Executive

Committee

Percentage

of Executive

Committee

White British or other White

(including minority-white groups) 5 72% 3 5 72%

Mixed/Multiple Ethnic Groups 2 28% 1 2 28%

Asian/Asian British

Black/African/Caribbean/

BlackBritish

Other ethnic group, including Arab

Not specified/ prefer not to say

1 Both the CEO and CFO are members of the Executive Committee.

Board evaluation

The Board undertakes an evaluation of the

activities and effectiveness of the Board

andits Committees on an annual basis in

compliance with the 2018 Code. This year,

the evaluation was undertaken externally,

led by the Trusted Advisor Partnership (TAP)

and supported by the General Counsel &

Company Secretary.

Following a briefing by the Chair and

GeneralCounsel & Company Secretary,

each of the Directors and other key

stakeholders attended a 1:1 meeting with

TAPto discuss their views on all aspects

oftheeffectiveness of the Board and its

Committees, including composition,

Directors’ contribution, Chair’s leadership

andthe extent to which the Board operates

at the right level and fulfils its responsibilities

with regard to strategy, risk oversight (with a

particular focus on ESG), shareholder value

creation and succession planning. TAP

produced a detailed report following its

review and attended a Board meeting to

lead a high-quality debate on opportunities

to enhance Board effectiveness.

The report concluded that the conversations

in the review meetings were: ‘open, reflective

and honest, underpinning a strong sense

ofcommitment to the Board’s appetite to

continue to improve’. The process concluded

that the Board and its Committees continued

to operate effectively.

Examples of areas considered to be a

strength include:

• a highly experienced, constructive and

diverse Board with an appetite for open

and honest debate;

• the Board Committees have the

appropriate level of expertise and are

well-supported by management and

advisers;

• A progressive ESG agenda delivering

some strong and meaningful progress.

Areas identified as possible opportunities

todevelop the Board’s effectiveness

furtherinclude:

• clearer articulation of the Company’s

strategic differentiators;

• continuing to leverage external advisers

and opinion to provide objective insight

into stakeholder sentiment;

• further consideration and communication

of the succession and development plans

for Board and senior management.

The Chair and the General Counsel

&Company Secretary are currently

developing an appropriate action plan in

response to the conclusions in the report

and the Board will review progress during

the course of the year.

66 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

DEAR SHAREHOLDER,

I am pleased to present the Audit

Committee’s report and update on the

Committee’s activities during financial

year2022/23. The Committee member

attendance is shown on page 60. In

addition to formal meetings during the

year,there were regular discussions on

theCompany’s internal controls and audit,

debt and capital structure and the estate

valuationprogramme.

This report explains the Committee’s

responsibilities and how it has discharged

them over the course of the year. I remain

confident the Committee has the

appropriate expertise to discharge its

dutiesand assist the Board by overseeing

andmonitoring the Company’s disclosures,

along with management’s assumptions

andjudgements.

Corporate Governance report continued

Audit Committee report

Notwithstanding the recent announcement

by the Government to withdraw the proposed

legislation covering the Audit and Assurance

Policy and related matters, the Committee

remains mindful of Audit Committees’ duties

and responsibilities in light of the wider Audit

and Corporate Governance reforms

including the formation of ARGA (the

Auditing, Reporting and Governance

Authority) and the proposed changes to

existing reporting. Work is already underway

to review and, where necessary, strengthen

the Company’s financial reporting

controlsenvironment.

During the year, the Committee’s

performance was assessed as part of the

external Board evaluation, the detail of which

is set out in the report by the Nomination

Committee, on page 66. In terms of the

effectiveness of the Audit Committee, the

Committee was deemed to be operating

effectively and it was noted that there was

evidence of good debate and challenge

supported by valuable dialogue outside

ofthe formal meeting process.

As highlighted by the Board Chair and

setoutin detail in this report, this year the

Audit Committee has recommended the

appointment of new auditors and a resolution

to confirm the appointment of RSM UK Audit

LLP will be put to the AGM in January 2024.

Ihave served as Audit Chair for seven years,

and I feel it is timely for the Board to appoint a

new chairperson to oversee the transition to a

new external Auditor. I would like to thank the

Committee members, management and

KPMG for their valuable contributions which

have supported the work of the Committee

under my stewardship.

The Committee is keen to continue its

constructive dialogue on audit matters

withall shareholders. Therefore, should

youhave any comments on any of the

matters set out in this report, please get

intouch by email c/o Audit Chair at

investorrelations@marstons.co.uk.

Mahew Robers

Chair of the Audit Committee

67Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Audit Committee report

External audit

KPMG LLP were appointed as the external

Auditor of the Company in 2020, with the

lead audit partner (John Leech) appointed

at the same time. The Company’s relationship

with the external Auditor is managed through

their attendance at each Audit Committee

meeting together with regular meetings

during the course of the year with the Chair

of the Audit Committee (both with and

without management present) providing

sufficient opportunity to interrogate

andchallenge key areas and assess

theirindependence.

Auditors’ effectiveness

KPMG has reported to the Committee

that,inits professional judgement, it is

independent within the meaning of

regulatory and professional requirements

andthe objectivity of the audit engagement

partner and audit staff is not impaired. The

Audit Committee assess the independence

ofthe external Auditor on an ongoing basis

by considering a range of factors, including

the length of tenure of the auditor and the

auditpartner, expertise, resources and the

relationship with the auditor as a whole and

the external Auditors’ own assessment of its

independence. The Audit Committee Chair,

CFO and the General Counsel & Company

Secretary meet with the external Auditor to

discuss the audit, significant risks and any key

issues included on the Audit Committee’s

agenda during the year.

The Committee is satisfied that KPMG meets

the required standard of independence to

safeguard the objectivity and integrity of

theaudit.

Members

Matthew Roberts (Chair)

Octavia Morley

Bridget Lea

Our responsibilities

• To assist the Board in discharging

itsresponsibilities by reviewing and

monitoring the integrity of the financial

reporting, paying particular attention

tosignificant judgements.

• To monitor the effectiveness of the

Company’s audit processes, internal

and external controls and risk

management systems.

• To review the external Auditor’s

independence, objectivity and

effectiveness.

The Audit Committee reports to

theBoardon its activities and makes

recommendations, all of which have

been accepted by the Board during

theperiod under review.

The Audit Committee met four times during

the year and all members attended all

meetings. The Director of Corporate Risk

and the external Auditor attend each

meeting. The Board Chair, Nick Varney, the

CEO, the CFO and other senior managers

are usually invited to attend allor part of

the meetings.

In advance of each meeting the

Committee Chair meets with the key

stakeholders and contributors including

the CFO, the General Counsel & Company

Secretary, the Director of Corporate Risk

and the external audit partner to discuss

their reports as well as any other relevant

issues. The Chair also had regular meetings

with the Director ofProperty and the

Company’s external valuers, when the

property valuation programme was

reviewed, and the Director of Corporate

Risk and other senior managers to

evaluate the Company’s internal controls,

governance framework and the progress

of the internal audit work.

All Committee members are independent

NEDs and have extensive relevant

financial, commercial and operational

experience which both benefit the

Committee and collectively illustrate its

competence in the sector in which the

Company operates.

Key activities during the

reporting year

• Reviewed the interim results and

fullyear accounts, including the

significant judgements and estimates,

going concern statement and viability

statement, and recommended

approval to the Board.

• Received the valuation of the

estate,considered and reviewed the

valuation including the methodology

adopted by the independent valuer.

• Oversaw the external Auditor’s

independence, objectivity and

effectiveness.

• Considered and approved the

process of re-tendering for an external

Auditor and made recommendations

to the Board.

• Reviewed the Company’s principal

and emerging risks, together with the

framework for managing, mitigating

and testing those risks.

• Reviewed and approved the

annualinternal audit plan for

financialyear 2023/24.

• Assessed the effectiveness of the

Company’s Whistleblowing Policy

– ‘Speak Up’.

• Considered the Company’s debt

structure and financial covenants.

• Reviewed the results of the annual

evaluation of the effectiveness of

theCommittee and recommended

improvements.

• Received updates on and approved

the Statutory Pubs Code compliance

report.

• Reviewed the Non-Audit Services

Policy and the external Auditor’s

non-audit fees.

68 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Non-audit work carried out by the

external Auditor

The external Auditor should not provide

non-audit services where it might impair

their independence or objectivity and the

Audit Committee has established a policy

to safeguard the independence and

objectivity of the Company’s external

Auditors, which can be found on our

website www.marstonspub.co.uk.

During the year, KPMG provided non-audit

services relating to bank and securitisation

reporting for a fee of £10,000. KPMG have

also proposed a fee of £25,000 in respect of

an audit of Banks’s Brewery Insurance

Limited (BBIL) and that work is ongoing.

Audit tender

When considering whether to recommend

the re-appointment of the external Auditor,

the Audit Committee considers a range of

factors, including the effectiveness and

expertise of the external Auditor, value for

money and the ongoing independence

and objectivity of the external Auditor.

During the year, the Group conducted a

comprehensive tender process for an

external Auditor. KPMG were invited to

tender alongside other firms, including

mid-tier audit firms.

The tender process was managed by the

Company’s Director of Financial Reporting

& Tax and each of the firms received a

formal invitation to tender. They spent time

with the Audit Committee Chair, the CFO,

the CEO and senior management. Written

proposals were submitted and the top two

firms gave oral presentations to the panel.

Following the rigorous process, the Audit

Committee recommended the

appointment of RSM UK Audit LLP as the

Company’s new external Auditor after the

conclusion of the 2022/23 audit. KPMG will

assist in an orderly handover of the external

function.

FRC Audit Quality Review (AQR)

During the year, the audit for financial

year2021/22 by KPMG was reviewed bythe

Financial Reporting Council’s (FRC) Audit

Quality Review team (AQR) as part ofthe

FRC’s annual inspection of audit

firms.TheAQR identified improvements

includinghow KPMG challenge and record

management’s impairment model for

associate investments. The Audit Committee

and KPMG discussed the AQR findings, and

the remedial actions proposed by KPMG,

and the Committee notes that actions to

address each of the findings have been

incorporated into KPMG’s audit for financial

year 2022/23. The Audit Committee Chair

also discussed the findings and proposed

actions with the AQR team.

Estate valuation

The Group is in year two of a three-year

valuation cycle, with Christie & Co

completing physical inspections of the

second third of the Group’s estate, with

afocus on inspecting pubs where there

havebeen changes to the shape of the

estate, including capital expenditure. The

Committee considered the valuation and

both KPMG and the Chair of the Audit

Committee met with Christie & Co to

consider and challenge their methodology

and approach as part of the year-end

process. KPMG also performed risk

assessment procedures over the entire

freehold estate to ensure that the key factors

impacting the valuation were consistently

applied. The Committee noted that overall,

KPMG considered the valuation to be

reasonable. The Committee notes that the

carrying value of the Group’s estate remains

at £2.1 billion. As a result of the valuation

andleasehold impairment review there is an

effective freehold impairment of £24.3 million

and a leasehold impairment of £4.9 million.

Further details are set out on page 5.

Financial reporting

While the responsibility for reviewing and

approving the annual report and accounts

and other financial statements is reserved for

the Board, the Audit Committee reviewed all

such financial statements, including the

estimates and judgements made by

management, and advised the Board on

whether, taken as a whole, they are fair,

balanced and understandable and provide

the information necessary for stakeholders to

assess the Group’s and Company’s position

and performance.

This review includes an assessment of the

adequacy of the disclosure with respect to

going concern and viability reporting, the

2018 Code and other applicable laws and

regulations, including the Task Force on

Climate-related Financial Disclosures (‘TCFD’)

and the requirements of the Listing Rules. The

Committee also monitors future corporate

reporting standards, such as the audit and

corporate governance reforms.

The Committee also recognises how critical

the view of the external Auditor is and

monitors and makes enquiries to satisfy itself

that suitably robust challenges have been

performed on estimates and judgements

management have made during the course

of the audit process. There was no significant

divergence between the views of

management and the external Auditor and

the Committee is satisfied that the estimates

and judgements are reasonable, and that

suitable accounting policies and APMs have

been adopted and disclosed in the accounts.

Fair balanced and understandable

Throughout the year, the Board received

updates on the performance of the business

and key challenges, opportunities and risks.

During the year-end process, comprehensive

reviews and validations are undertaken by

the Company Secretariat and Finance teams,

with cross-functional support from across the

business, to ensure that the information

provided in the Annual Report and Accounts,

when taken as a whole, is fair, balanced and

understandable.

Corporate Governance report continued

Audit Committee report

69Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Audit Committee report

Drafts of each section of the Annual Report

and Accounts are reviewed for consistency

and alignment across the whole document,

and linkage to strategy, business model and

risks. The accuracy of the content is then

verified by supporting evidence before

presentation to the Board, in good time

forconsideration ahead of final approval.

Theexternal Auditor provides reassurance

through their review processes which are

focused on consistency between the

narrative and numbers, and an assessment

ofwhether the description of business

performance is consistent with the

understanding gained through their audit

procedures, to present a fair and balanced

report on the period. Having reviewed the

processes described, the Board is satisfied

that the Annual Report and Accounts taken

as a whole presents a fair, balanced and

understandable representation of the

Company’s position and performance,

together with its strategy and business model.

Significant financial judgements

The following areas of significance were

allsubject to review and challenge by

theCommittee and were discussed

andaddressed with our external Auditor

throughout the external audit process.

Thisincluded reviewing papers prepared

bymanagement detailing the rationale

forthe accounting treatments adopted.

Under IFRS the Group is required to make

estimates and assumptions that affect

theapplication of policies and reported

amounts. Estimates and judgements are

continually evaluated and are based on

historical experience and other factors

including expectations of future events that

are believed to be reasonable under the

circumstances. Actual results may differ

fromthese estimates. The Group’s key

assumptions and significant judgements are:

• Non-underlying items – determination of

items to be classified as non-underlying.

• Property, plant, and equipment –

valuation of effective freehold land

andbuildings.

• Retirement benefits – actuarial

assumptions in respect of the defined

benefit pension plan, which include

discount rates, rates of increase in

pensions, inflation rates and life

expectancies.

• Financial instruments – valuation of

derivative financial instruments.

• CMBC – recoverable amount of the

investment in associate estimated on a

value in use basis.

Going concern

As part of the annual reporting process,

theGroup is formally required to assess the

extent to which its forecasts and therefore its

financing requirements may or may not

affect the Group’s going concern assumption

in preparing the accounts and the Audit

Committee has monitored and reviewed

management’s assessment and assumptions,

which included the Group’s financial position

and exposure to principal risks, including the

cost-of-living crisis and inflationary pressures.

The Committee noted in particular that the

Group’s forecasts assume moderate sales

price increases and operational costs that

have not been secured rising broadly in line

with inflation. The Committee also noted

thatmanagement considered a severe but

plausible downside scenario, incorporating

a5% reduction in sales volume as a

consequence of the cost-of-living crisis and

current inflationary pressures along with a

reasonably plausible increase in costs

compared to the base case forecast.

The conclusion of this assessment was that

theDirectors are satisfied that the Group

hasadequate liquidity and is not forecast to

breach any covenants within its banking

group, private placement or securitisation

inits base case forecast. The Directors are

alsosatisfied that the Group has adequate

liquidity to withstand the severe but plausible

downside scenario.

However, in this severe but plausible

forecastonly, even after factoring in

mitigations under the control of management

such as reductions in discretionary spend, the

Group would be required to obtain covenant

amendments in respect of its Interest Cover

covenant associated with the Group’s bank

and private placement borrowings in the

outer quarters of the going concern period.

In such a severe but plausible downside,

theGroup could leverage the supportive

relationship it has with its lenders and

renegotiate the terms of its financing in

advance of any covenant amendment

being required or it would seek a covenant

amendments. Whilst there is no guarantee,

based on covenant amendments previously

secured, and the successful amend and

extend to the RCF and private placement

during the period and the continued positive

relationships, the Directors would expect to

be very confident that they would be able to

secure any such amendments

Accordingly, the Committee notes

thefinancial statements continue to be

prepared on the going concern basis, but

with a material uncertainty arising from the

current macroeconomic environment. Full

details are included in Note 1.

70 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report continued

Audit Committee report

CMBC: Due to the size of Marston’s

investment in CMBC, and the potential

sensitivity of the recoverable amount of the

investment to a change in assumptions, the

Committee notes an impairment review was

undertaken under IAS 36 ‘Impairment of

Assets’. The recoverable amount of the

investment was estimated on a value in use

basis and the Committee notes this was

based on forecast cash flows approved by

the board of CMBC, which were reviewed by

management and CMBC’s external Auditors.

The impairment review indicated there

wassufficient headroom over the carrying

amount, and consequently no impairment

has been recognised by management and

the Committee supported this approach.

Anumber of different potential downside

scenarios were considered by management

and changing each key assumption to the

limit of the reasonably possible downside did

not result in impairment. A severe downside

scenario which considered a combination

ofreduced dividends together with a

decrease in growth rate and a large

increase in discount rate could lead

toasmall impairment.

Market capitalisation: Uncertainty and

restricted trading during the last few years,

including the pandemic and cost-of-living

crisis, have negatively impacted the

Company’s share price.

This share price suppression, which also

affects our industry peers and other UK

listedentities to varying extents, has resulted

ina gap between the Company’s market

capitalisation and asset values. Management

has performed a market capital gap analysis

to determine whether an impairment of the

asset values is required. The analysis showed

that there is sufficient headroom between the

total asset value and enterprise value and the

Committee is satisfied with management’s

conclusion that no impairment is required.

Risk management and

internalcontrol

The Audit Committee is responsible

forreviewing and monitoring the

effectiveness ofthe Company’s framework

ofinternal controls. At least annually the

AuditCommittee receives a report and

presentation on the Company’s principal risks,

both current and emerging, and the systems

and controls in place (whether operational,

financial or otherwise) on how the Company

manages and mitigates thoserisks. The

Company’s principal risks are on page43.

TheBoard considers the effectiveness of

therisk management and internal control

through a thorough assessment of risks that

the business faces, that could threaten its

long-term sustainability. The Company has

controls and related policies in place which

cover a range of issues, including financial

reporting, businesscontinuity, data and

cybersecurityand ESG.

As set out on page 52, the Risk & Compliance

Committee is responsible for monitoring all

areas of legal and regulatory compliance

and for approving Company policies.

Regularupdates on the activities of the Risk &

Compliance Committee are provided to the

Audit Committee. There are also a number of

sub-committees that focus separately on:

Data Security, ESG (including TCFD) and

business continuity risks and further detail can

also be found on page 52.

Internal Audit

The Company’s internal audit function is

managed by the Director of Corporate Risk

who regularly meets with the Chair of the

Audit Committee and external Auditors to

discuss the effectiveness of Marston’s

internal controls, risk management and

compliance across the business. More

details of the Group’s approach to risk

management and internal controls are

provided in the Strategic report on

pages40to 52.

Whistleblowing

The Company is committed to high

standards of integrity and accountability

and as a result has a Whistleblowing Policy

together with an online portal called ‘Speak

Up’ which enables employees to report any

concerns anonymously and confidentially.

The platform also enables the Company

togather anonymous insight on emerging

trends or areas requiring greater focus. This

year, a campaign was launched to raise

awareness of the importance of ‘speaking

up’ and the many ways in which employees

can do this. The Audit Committee receives

an annual report on whistleblowing.

Business ethics

The Company is committed to high

standards of business integrity and ethical

conduct. As well as having appropriate

policies in place, the Directors, the Executive

Committee and the Leadership Group

undertake training in business ethics, which

includes the Bribery Act and the Company’s

Corporate Hospitality and Gifts Policy,

director’s duties and share dealing.

Statutory Pubs Code

The Audit Committee approved the

compliance report submitted to the Pubs

Code Adjudicator (PCA) for the reporting

period 1 April 2022 – 31 March 2023 (PCA

Period). During the PCA period, Marston’s

received seven valid market rent-only

requests from tied tenants, of which none

were referred to the Pubs Code Adjudicator

for arbitration and was not subject to

anyinvestigations, enforcements or

representations of unfair business practices

by the PCA. The PCA compliance report and

supporting information can be accessed

here: www.marstonspubs.co.uk.

71Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report continued

Directors’ Remuneration report

DEAR SHAREHOLDER,

I am pleased to present our report for the

period ended 30 September 2023 which

sets out how the Directors’ Remuneration

Policy has been applied during the period

and how we intend to operate the

Remuneration Policy in 2023/24.

Overview of performance in

2022/23 and business context

During financial year 2022/23, we have

continued to focus on the core estate and

progress towards creating a simplified, high

quality, predominantly community pub

business, with minimal exposure to city

centres, where demand is more volatile.

Despite the continuing challenging

macroeconomic environment we have

achieved revenue and underlying pub

operating profit growth, improved net cash

inflow and continued to make progress with

our debt reduction strategy.

Total revenue for the reporting year increased

by 9.1% to £872.3 million (2022: £799.6 million),

with underlying EBITDA (excluding income

from associates) increasing to £170.3 million

(2022: £159.6 million). In addition, we have

seen a significant improvement in guest

satisfaction, team engagement and pub

standards metrics.

Given the priority to reduce the overall

levelof borrowing and the continued

macroeconomic uncertainty, the Board

have agreed that no dividends will be paid

in respect of the reporting year. We remain

cognisant of the importance of dividends to

shareholders and we intend to keep

potential future dividends under review.

Performance outcomes for the year

Annual bonus 2022/23

Stretching targets were set at the start

of2022/23, based on a balanced mix of

financial (Group sales, EBITDA and FCF)

andstrategic measures (Reputation scores

and employee engagement).

Our Reputation score of 766 and employee

engagement score of 8.2 achieved

maximum performance against the

targetsset at the start of the reporting year,

reflecting the efforts of our people, who are

fully engaged in delivering great guest

experiences. In turn, Group sales increased,

and we achieved threshold performance

against the target set at the beginning of

theyear. However, having narrowly missed

threshold performance for EBITDA, and with

FCF being impacted by higher interest costs

and continuing high energy prices, the

Committee considered the formulaic

outturnof 35% of maximum and agreed with

management that, given the strategic focus

on debt reduction and renewed focus on

improving margins, it should exercise

discretion to reduce the payout to zero.

A full breakdown of the objectives and our

performance against them is set out on

page 79.

LTIP 2020/21 award vesting

The three-year performance period for the

LTIP award made in May 2021 ended on

30September 2023. The award was made

outside of the normal timetable due to the

impact of the COVID-19 global pandemic.

Performance was based 40% on underlying

Earnings Per Share (EPS), 40% on Net Cash

Flow (NCF) and 20% on Total Shareholder

Return (TSR) versus the companies in the

FTSE 250 Index (excluding Investment Trusts).

Each of the three performance measures,

EPS, NCF and relative TSR, failed to meet

thethreshold performance requirement.

Therefore, the awards lapsed in full.

The Committee is comfortable that actions

taken on pay during the year across the

Company were appropriate and balanced

the interests of all stakeholders and that the

Remuneration Policy operated as intended.

Board changes after the year-end

As announced on 17 November 2023,

Andrew Andrea stepped down from the

Board with immediate effect. Andrew will

be available to the business in order to

facilitate a smooth handover and transition

until 31 December 2023. From 1 January

2024, it is intended that he will be placed

ongarden leave for the remainder of his

9months’ notice period. In the context

ofAndrew’s departure, he will be treated

asagood leaver in connection with

hisincentives.

We were also pleased to announce that,

following a thorough external process,

Justin Platt, previously the Chief Strategy

Officer at Merlin Entertainments, would be

appointed as Chief Executive Officer with

effect from 10 January 2024.

When determining his remuneration

package, the Committee considered a

number of factors which included (i) his

previous package at Merlin Entertainments,

(ii) pay at companies of a similar size and

complexity and, (iii) a competing job offer

elsewhere and (iv) the package for the

former CEO. As a result, Justin’s base salary

was set at £600,000 (6.5% lower than the

2023/24 FY salary rate of £639,245 for the

former CEO). He will also be eligible for

anannual bonus of up to 125% of salary

(pro-rated for the period of his employment)

and an LTIP grant of 150% of salary, both in

line with normal policy. Incentive levels were

set to drive sustained long-term performance

and reflect the Company’s commitment to

attracting and retaining top-tier talent.

Implementation of the

Remuneration Policy 2023/24

The Committee has considered how the

remuneration policy should be implemented

for 2023/24. This included reviewing current

practice against both market and best

practice, pay across the business and the

views of management, in light of the CEO

succession, the Committee concluded that

the incoming CEO should be given time to

review the proposed targets for the LTIP,

whichhas meant that full details have not

been finalised in time for the publication

ofthis report.

72 Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Directors’ Remuneration report

Therefore, full details will be set out in the 2024

Annual Report and Accounts instead.

Base salary and fees effective

1October2023

During the year, the Committee reviewed

the salary increases for the wider salaried

workforce taking into account external

benchmarking, the ongoing cost of living

challenges and the need to control our cost

base. As a result of the review, the majority

of the wider salaried workforce received an

increase of 4% of salary. In the context of

these increases, the Committee were

satisfied with a lower award of 3% for the

current CFO and departing CEO.

Non-executive Director and Chair fees have

been increased by 3% for 2023/24.

Annual bonus for 2023/24

The CEO will be eligible for an annual bonus

of up to 125% of salary (pro-rated for the

period of this employment). The annual

bonus opportunity for the CFO will remain at

100% of salary, in line with the previous year.

In line with 2022/23, the annual bonus will

be subject to Group EBITDA (30%), recurring

free cash flow (20%), Group sales (20%),

Reputation score (15%) and employee

engagement (15%) performance measures.

The targets will be stretching and

incentivising with one third of any bonus

paid deferred into shares for three years.

LTIP for 2023/24

The maximum grant limit under the current

policy remains at 150% of base salary and,

in line with his agreement to join Marston’s,

the CEO will receive an LTIP grant of 150% of

salary. It is anticipated that the CFO will

receive an LTIP award of 125% of salary, in

line with the normal policy level, provided

that the share price at the time of grant is

broadly consistent with the share price used

for last year’s award. The LTIP will be subject

to Underlying PBT (20%), net cash flow (40%),

Operating margin (20%) and relative Total

Shareholder Return (20%) performance

measures. Operating margin has replaced

ROCE and there has been an increase in

the weighting of the cashflow measures, in

line with our strategic priorities set out earlier

in the Annual Report. The Committee will

undertake a final review of LTIP quantum

and full details of the performance targets

and grant level for the CFO will be disclosed

in the regulatory news announcement that

will be made following the grant of options.

Other considerations during the year

Executive Director pay and the wider

workforce

We aim to operate with fairness, integrity,

and transparency across the business.

Salary, benefits and performance related

rewards provided to employees are taken

into account when setting the policy for

Executive Directors’ remuneration.

Salary increases across the workforce

werereviewed during the year, taking into

account inflation and the continuing cost

ofliving challenges. For the majority of our

pub teams, their remuneration is set by

statute rather than the market. Total pay

awards for our pub team members ranged

between 5% and 9.6%, with a total

aggregated increase of 6.9%.

The Committee also has oversight of how

bonus schemes throughout the organisation

align, and of the performance measures,

targets and outturn of each scheme. Bonus

measures and targets are aligned to our

vision and strategic objectives for the

entireworkforce.

Bridget Lea is our designated

Non-executiveDirector for Workforce

Engagement and is a member of

theRemuneration Committee. Bridget

conducted an employee engagement

session during the year. Executive

remuneration was not raised as a material

issue during the year. Therefore, no

amendments were required to the proposed

implementation of the policy in 2023/24 as a

result of this engagement. Further details on

engagement with our people throughout

the year, is provided on page 17.

Shareholder engagement

The Committee consults with its larger

shareholders on executive pay matters,

where considered appropriate. Ahead of

the 2023 annual general meeting (AGM), the

Committee engaged with the Company’s

major shareholders and the leading

shareholder advisory bodies in relation to

the2023 Directors’ Remuneration Policy. We

were grateful forthe feedback we received

during the consultation process, and we

received over 93% support at the AGM.

We continue to welcome and encourage

all feedback from our shareholders as it

helps inform our thinking on remuneration

matters and we hope we can rely on your

continuing support. If you would like to

contact me directly to discuss any aspect

ofour Policy or this report, then please email

me at remunerationchair@marstons.co.uk.

I will be available at the AGM (on 23 January

2024) to answer your questions. Alternatively,

if you are not able to attend the AGM,

please do send your questions to the

emailaddress above.

Ocavia Morley

Chair of the Remuneration Committee

73Marston’s PLC Annual Report and Accounts 2023

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Directors’ Remuneration report

Members

Octavia Morley (Chair)

Bridget Lea

Matthew Roberts

Nick Varney

Our responsibilities

• Determining the framework and policy

for Executive Directors’ remuneration.

• Setting the remuneration for the

Executive Directors and other members

of the Executive Committee (including

the General Counsel & Company

Secretary).

• Setting the Chair’s remuneration.

• Establishing remuneration schemes

that promote long-term shareholdings

by Executive Directors, that support

alignment with long-term shareholder

interests.

• Designing remuneration policies and

practices to support the successful

delivery of our strategy and promote

long-term sustainable success, with

remuneration aligned to the

Company’s purpose and values.

• Choosing appropriate performance

measures and targets for annual and

long-term incentive awards, exercising

independent judgement and

discretion when considering awards

and pay-outs, taking account of

Company and individual

performance and wider

circumstances.

• When determining remuneration policy

and practices, considering the Code

requirements for clarity, simplicity, risk

mitigation, predictability, proportionality

and alignment to culture.

• Considering remuneration policy in the

context of the wider workforce benefit

structures, pension provision and

remuneration trends across the business

and challenge, when necessary, to

ensure alignment.

The Committee met five times during

theyear. The Committee receives advice

from a number of different sources. This helps

to inform decision-making and ensures the

Committee is aware of pay and conditions in

the business as a whole, and conditions in

the wider market.

The CEO attended all meetings during the

year to provide advice in respect of the

remuneration of senior management. The HR

Director and Deputy Company Secretary also

attend each meeting and provide advice to

the Committee. No person is in attendance

for any discussions regarding their own

remuneration.

Korn Ferry were appointed as advisers

totheCommittee following a review

in2022and attend meetings when

required.Korn Ferry provided advice on the

implementation of the Remuneration Policy

and supported management with technical

matters relating to the execution of the

Committee’s decisions. Korn Ferry received

fees amounting to £20,000 during the year in

respect of advice given to the Committee.

Korn Ferry is a member of the Remuneration

Consultants Group and, as such, voluntarily

operates under its Code of Conduct in

relation to executive remuneration

consulting in the UK. During 2022/23, Korn

Ferry did not provide any other services to

the Company other than on remuneration

related matters. The Committee is satisfied

that the advice received was objective and

independent.

Key activities during the

reportingyear

• Reflected on the Remuneration Policy

review in the context of shareholder

feedback and voting outcomes at the

2023 AGM.

• Consideration of pay review proposals for

the Chair, senior management and the

wider workforce.

• 2022/23 bonus and 2020/21 LTIP award

outturns.

• Consideration of targets for operational,

Group, senior management and

Executive Director bonus schemes.

• Approval of new LTIP scheme rules

ahead of the 2023 AGM.

• Consideration of LTIP performance

metrics and grant.

• Review of Executive Directors’ and

senior management shareholdings in

the Company, in the context of

shareholding guidelines.

AGM voting outcomes

The following table summarises the

detailsof votes cast for the Directors’

Remuneration Policy and the Directors’

remuneration report at the 2023 AGM,

along with the number of votes withheld.

The Committee will continue to consider

the views of, and feedback from,

shareholders when determining and

reporting on remuneration

arrangements.

Votes

For %

Votes

Against %

Votes

Total

Votes

withheld

Directors’ Remuneration

Policy 2023 AGM 64,571,195 93.20% 4,709,941 6.80% 69,281,136 86,649

Directors’ remuneration

report 2023 AGM 63,667,725 93.26% 4,599,791 6.74% 68,267,516 1,100,272

74 Marston’s PLC Annual Report and Accounts 2023

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Remuneration summary

Performance snapshot for 2022/23

Annual bonus performance for 2022/23

Measure

Weighting of

measure

Outturn

(as a % of max)

Outcome

(% total award)

Group EBITDA 30% 0% 0%

Free cash flow 20% 0% 0%

Group sales 20% 25% 0%

Reputation score 15% 100% 0%

Employee engagement 15% 100% 0%

Long-term incentive performance May 2021 award

Measure

Weighting of

measure

Outturn

(as a % of max)

Outcome

(% total award)

Underlying EPS 40% 0% 0%

Net cash flow 40% 0% 0%

Relative TSR vs FTSE250 (excluding Investment Trusts) 20% 0% 0%

Implementation for 2023/24

Base salary • Justin Platt – £600,000 (Base salary with effect from

10January 2024)

• Hayleigh Lupino – £409,773 (3% increase)

Benefits No change

Pension 3% of salary

Bonus • Maximum opportunity:

− Justin Platt – 125% of salary

− Hayleigh Lupino – 100% of salary

• Performance measures: Group EBITDA (30%), recurring free

cash flow (20%), Group sales (20%), Reputation score (15%)

and employee engagement (15%)

• One third of any bonus earned will be deferred for three

years

LTIP • Maximum opportunity:

− Justin Platt 150% of salary

− Hayleigh Lupino 125% of salary

• Performance measures: Underlying PBT (20%), net cash flow

(40%), Operating margin (20%) and relative Total Shareholder

Return (20%)

• Targets to be confirmed

• 2-year post-vesting holding period applies

Shareholding guidelines • In employment: 200% of salary

• Post-employment: 200% of salary for 2 years

Incentive timelines

Year 1 Year 2 Year 3 Year 4 Year 5

Annual bonus

Long-term incentive plan

Key:

Performance period Deferral/holding period

75Marston’s PLC Annual Report and Accounts 2023

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Directors’ Remuneration Policy

A summary of the Directors’ Remuneration Policy, approved by shareholders at the

2023AGM, on 24 January 2023, and effective from that date, is set out below. The policy

isintended to apply forthree years. The full policy can be found on pages 78 to 86 of the

2022 Annual Report and Accounts and is also available online in the Governance section

of our website (www.marstonspubs.co.uk/investors).

When determining the remuneration policy, the Remuneration Committee considered the

six factors listed under Provision 40 of the UK Corporate Governance Code. Full details are

set out on page 79 of the 2022 Annual Report and Accounts.

Summary Policy table

Element

Purpose and link

tostrategy Key features

Base salary Core element of

fixed remuneration,

reflecting the

individual’s role

andexperience.

• Usually reviewed annually and fixed for 12months

commencing 1 October.

Benefits Ensures the overall

package is

competitive.

• Executive Directors receive benefits in line with

market practice which include a car allowance,

private medical insurance and life assurance.

• Other benefits may be provided based on the role

and individual circumstances.

Retirement

benefits

Contributing to

savings to deliver

appropriate income

in retirement.

• Pension contributions (or cash allowance) will not

exceed the pension contributions available to the

majority of the workforce (which is currently 3% of

salary).

Annual

bonus

Rewards

performance

against targets

which support the

strategic direction

ofthe Group.

Compulsory deferral

into shares aligns

Executive Directors

with shareholder

interests and

provides a retention

element.

• The maximum annual bonus opportunity is 125% of

base salar y.

• At least 50% of the award will be based on financial

performance measures aligned to the Group’s

financial key performance indicators.

• No more than 20% of the relevant portion of the annual

bonus is payable for delivering a threshold level of

performance, and no more than 50% is payable for

delivering a target level of performance (where the

nature of the performance metric allows such an

approach).

• One third of any bonus paid (after tax) will be used to

purchase shares which the Executive Director must

normally hold for three years.

• Committee discretion and malus and Clawback apply.

Element

Purpose and link

tostrategy Key features

Long Term

Incentive

Plan (‘LTIP’)

Incentivises

Executive Directors

to deliver against

the Group’s strategy

over the longer term.

Long-term

performance targets

and share-based

remuneration

support the creation

of sustainable

shareholder value.

• The normal maximum award size will be up to 150%

of base salary.

• In exceptional circumstances the Committee

reserves the right to award up to 200% of salary.

• Performance measures will be determined by the

Committee for each LTIP award in line with the

long-term business strategy and KPIs.

• Threshold performance under each metric will result

in no more than 25% of that portion of the award

vesting.

• Vested LTIP awards are normally subject to an

additional holding period of two years before being

released.

All-

employee

share plan

To provide alignment

with Group

employees and to

promote share

ownership.

• The Executive Directors may participate in any

all-employee share plan operated by the Company.

Shareholding

guidelines

To provide alignment

with shareholders’

interests.

• During employment: Executives are required to build

up and retain a shareholding equivalent to 200% of

their base salary. Until the shareholding requirement

is met, Executive Directors will be required to retain

50% of the net of tax shares they receive under any

incentive plan.

• Post-employment: Any Executive Director leaving the

Company will be expected to retain the lower of the

shares held at cessation of employment and shares

to the value of 200% of salary, for a period of two

years. The Committee will have discretion to amend

the requirement in exceptional circumstances.

Non-

executive

Director fees

Non-executive

Director fees are

setat a level that

reflects market

conditions and is

sufficient to attract

individuals with

appropriate

knowledge and

experience.

• Non-executive Directors receive a basic fee and an

additional fee for further duties.

76 Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Directors’ Remuneration Policy

Recruitment Remuneration Policy

Executive Directors

When setting remuneration packages for new Executive Directors, pay will be set in line

with the Remuneration Policy outlined above. In determining appropriate remuneration,

the Committee will take into consideration all relevant factors (including the quantum and

nature of remuneration) to ensure the arrangements are in the best interests of Marston’s

and its shareholders.

Salary Base salary will be set at a level appropriate to the role and experience

of the Executive Director being appointed. This may include agreement

on future increases up to a market rate, in line with experience and/or

responsibilities and subject to good performance, where it is considered

appropriate.

Pension and benefits Pension and benefits will be provided in line with the Policy.

Relocation Appropriate costs and support will be covered if the recruitment requires

relocation of the individual.

Annual bonus New joiners may receive a pro-rated annual bonus based on their

employment as a proportion of the financial year and targets may be

different to those set for other Executive Directors subject to a maximum

annual bonus opportunity of 125% of base salary.

LTIP Grants under the LTIP will be made in line with the Remuneration Policy

in the year of joining, subject to the maximum award limit of 200% of

base salar y.

For the avoidance of doubt, in the case of an internal promotion, legacy

arrangements should be allowed to continue including continuation of

the plan the individual is in for the year of joining if required.

Buyout awards For external appointments, the Committee (if it is considered

appropriate) may make an award to ‘buy-out’ incentive awards that will

be forfeited on leaving a previous employer. To the extent possible

buy-out awards will be made on a broadly like-for-like basis.

Service contracts and policy on payment for loss of office

The Executive Directors have a service contract requiring either nine or 12 months’ notice

oftermination from either party as shown below.

The current Non-executive Directors, including the Chair, do not have a service contract

and their appointments, whilst for a term of three years, may be terminated without

compensation at any time. All Non-executive Directors have letters of appointment,

andtheir appointment and subsequent reappointment is subject to annual approval

byshareholders.

Name Commencement date Unexpired term remaining as at 30 September 2023

Justin Platt 10 January 2024 Terminable on 12 months’ notice.

Hayleigh Lupino 3 October 2021 Terminable on nine months’ notice.

Bridget Lea 1 September 2019

Fixed term expiring on 31 August 2025 (subject to

renewal) and terminable on one month’s notice.

Octavia Morley 1 January 2020

Fixed term expiring on 31 December 2025 (subject

to renewal) and terminable on one month’s

notice.

Matthew Roberts 1 March 2017

Fixed term expiring on 28 February 2024 (subject

to renewal) and terminable on one month’s

notice.

Nick Varney 1 July 2022

Fixed term expiring on 30 June 2025 (subject to

renewal) and terminable on one month’s notice.

William Rucker 1 October 2018

Fixed term expiring on 30 September 2024

(subject to renewal) and terminable on six

months’ notice.

77Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report continued

Directors’ Remuneration Policy

The principles on which the determination of payments of loss of office will be approached

are summarised below:

Provision Treatment upon loss of office

Payment in lieu

ofnotice

Payments to Executive Directors upon termination of their contracts will be

equal to base salary plus the value of core benefits for the duration of the

notional notice period.

They will also be entitled to pension contributions for the duration of the

notional notice period or the requisite cash allowance equivalent.

The Executive Director will normally have a duty to seek alternative

employment and any outstanding payments will be subject to offset against

earnings from any new role.

A de minimis value of £1,000 will apply for reporting purposes.

Annual bonus ‘Qualifying leavers’ will be eligible to receive an annual bonus at the usual

time with performance measured at the usual time. The annual bonus will

normally be pro-rated for service during the financial year. Any bonus

earned will be paid in cash and shares in line with the current policy.

‘Non-qualifying’ leavers will not normally be eligible to receive an

annualbonus.

Shares subject to a holding period will normally be released at the

normaltime.

LTIP The treatment of any award under the LTIP would be determined based on

the leaver provisions contained within the LTIP rules.

Awards are forfeited on cessation of employment except for ‘qualifying

leavers’ (where awards vest subject to performance conditions and are

normally scaled back pro rata to the proportion of the performance or

vesting period served).

Shares subject to a holding period will normally be released at the

normaltime.

Provision Treatment upon loss of office

Change of control There are no enhanced contractual provisions on a change of control.

Upon a change of control incentive awards will usually vest and be subject to

performance conditions. Pro-rating for time, to reflect the proportion of the

performance period that has elapsed will ordinarily apply to LTIP awards. The

Committee retains the discretion to waive pro-rating for time. Awards may

vest on a similar basis on the occurrence of any other relevant event.

Other payments Payments may be made in the event of loss of office under the all-employee

scheme (which is governed by its respective rules and the applicable tax

legislation and does not provide for discretionary treatment). The Committee

reserves the right to make any other payments in connection with a Director’s

cessation of office or employment where the payments are made in good

faith in discharge of an existing legal obligation (or by way of damages for

breach of such an obligation) or by way of settlement of any claim arising in

connection with the cessation of a Director’s office or employment. Any such

payments may include but are not limited to payments in respect of accrued

holiday pay, outplacement and legal fees and other relevant benefits.

78 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report continued

Annual Report on Remuneration

This part of the Directors’ Remuneration report sets out how we have implemented our

current Remuneration Policy during the period ended 30 September 2023. Sections in the

report not specifically stated as audited are not subject to audit.

Executive Directors

Total remuneration payable (audited)

Period ended

30September 2023

Salary

Benefits

Pension

Other

Total

fixed

Bonus

Long-term

incentives

Total

variable

Total

Andrew Andrea 620,626 17,480 18,619 0 656,725 0 0 0 656,725

Hayleigh Lupino 397,838 13,500 11,935 0 423,273 0 0 0 423,273

Period ended

1October 2022

Salary

Benefits

Pension

Other

Total

fixed

Bonus

Long-term

incentives

Total

variable

Total

Andrew Andrea 601,765 17,465 18,360 4,996 642,586 84,357 56,711 141,068 783,654

Hayleigh Lupino 385,310 13,478 11,603 4,996 415,387 54,075 6,687 60,762 476,149

1 Private medical insurance benefits are unchanged but premiums may vary from year to year.

Benefitsinclude a car allowance, private medical insurance and life assurance.

2 Both Executive Directors received a pension contribution of 3% of salary, in line with the wider workforce.

3 This figure relates to the grant of Sharesave options during the 2021/22 reporting year.

4 LTIP values included in the Total remuneration payable table for the period ended 1 October 2022

comparative figures have been updated to reflect the actual market value of the LTIP awards that vested

on 12 December 2022, of £0.3810. The share price was £1.294 at the time of grant of the award. Therefore,

none of the value of the award is due to share price appreciation.

Annual bonus 2022/23

For 2022/23, the maximum bonus opportunity for Executive Directors was 100% of salary.

Stretching targets were set at the start of 2022/23. Targets were based on a balanced mix

offinancial (EBITDA, FCF and Group sales) and strategic measures (Reputation scores and

employee engagement). Performance against the measures to 30 September 2023 is set

out below.

Performance metric Weighting

Threshold

(20% of

maximum)

Target

(50%of

maximum)

Maximum

(100% of

maximum) Actual % of salary

Group EBITDA 30% £172.0m £177.0m £182.0m £170.3m 0%

Group free cash flow 20% £32.59m £37.59m £42.59m £15.6m 0%

Group sales 20% £867.8m £893.2m £909.2m £872.3m 5%

Reputation score 10% 720 740 760 766 15%

Employee engagement 10% 7.6 7.8 7.9 8.2 15%

Bonus outturn 35%

Bonus awarded 0%

As reported in the Annual Statement, we achieved threshold Group sales performance and

our Reputation score and employee engagement measures both exceeded maximum

performance. However, having narrowly missed threshold performance for EBITDA, and

with FCF being impacted by working capital outflows, the Committee considered the

formulaic outturn of 35% of maximum and agreed with management that, given the

strategic focus on debt reduction and renewed focus on improving margins, it should

exercise discretion to reduce the payout to zero.

79Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Annual Report on Remuneration

LTIP awards vesting in respect of performance during 2022/23 (audited)

The 2020/21 LTIP award was granted in May 2021. The award was made outside of the

normal timetable due to the impact of the COVID-19 global pandemic.

The performance targets for these awards and the performance to 30 September 2023 are

shown below:

Performance metric Weighting

Threshold

at 25%

On-target

50%

vesting

Maximum

100%

vesting Actual

LTIP

vesting

Underlying EPS 40% 6.4p 6.9p 7.2p 5.1% 0% out of 40%

NCF (cumulative) 40% £200m £215m £240m £178.7m 0% out of 40%

TSR v FTSE 250

(excludingInvestment

Trusts) 20% Median –

Upper

quartile

Below

median 0% of 20%

Total 0% out of 100% of maximum

Each of the three performance measures, EPS, NCF and relative TSR, failed to meet the

threshold performance requirement. Therefore, the award lapsed in full.

The outcomes for the Executive Directors are shown below.

Executive Director

Number of

granted

Number of

shares due

to vest

Total

Andrew Andrea 510,295 0 0

Hayleigh Lupino

75,324 0 0

1 The share price was £0.9625 at the time of grant of the award, compared to the three-month average share

price of £0.3123 to 30 September 2023.

2 Hayleigh Lupino received the May 2021 LTIP award in her previous role within the Group.

LTIP awards granted during 2022/23 (audited)

LTIP awards were granted on 13 December 2022 as nil cost options. The details of the

awards granted are as follows:

Percentage

of salary

Number of

nil-cost

options

granted

Face value

at grant

% of award

vesting at

threshold

Performance

period

Holding

period

Andrew Andrea 125% 2,036,176 £775,783 25% Financial

periods

2022/23–

2024/25

Financial

periods

2025/26–

2026/27Hayleigh Lupino 104% 1,085,960 £413,751 25%

1 Calculated using the mid-market share price at date of grant of £0.3810.

The awards will vest subject to the satisfaction of performance metrics set out below:

Weighting

Threshold

25%

vesting

Maximum

100%

vesting

Underlying PBT (in FY 2024/25) 30% £72.0m £87.0m

NCF (three-year aggregate) 30% £130.0m £164.0m

Return on Capital Employed (three-year average) 20% 6.5% 7.3%

Relative Total Shareholder Return v FTSE 250 (excluding

Investment Trusts) 20% Median

Upper

quartile

1 Straight-line vesting applies between threshold, on-target and maximum performance.

80 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report continued

Annual Report on Remuneration

Non-executive Directors

Total remuneration (Chair and Non-executive Directors) (audited)

Base Fee

Committee

Chair

SID

2022/23

Total

20 21/22

Total

Bridget Lea 57,165 57,165 55,500

Octavia Morley 57,165 10,300 10,300 77,765 75,500

Matthew Roberts 57,165 10,300 67,465 65,500

William Rucker 212,180 212,180 206,000

Nick Varney 57,165 57,165 13,875

1 The maximum authority for Non-executive Directors’ fees (in aggregate), as outlined in our Articles of

Association, is £750,000 a year, as approved by shareholders at our 2017 AGM.

Interests in ordinary shares (audited)

The beneficial interests of the Non-executive Directors and their connected persons in the

share capital of the Company are shown below:

As at

30.09.23

As at

01.10.22

Bridget Lea 86,703 50,000

Octavia Morley 25,000 25,000

Matthew Roberts 25,000 25,000

William Rucker 400,000 400,000

Nick Varney 317,882 227,902

Payment for loss of office (audited)

No payments were made for loss of office during the reporting year.

As announced on 17 November 2023, Andrew Andrea stepped down from the Board with

immediate effect. Aperiod of handover will continue until 31 December 2023, and the

remainder of the nine-month notice period is being taken as garden leave from 1 January

2024 until 16 August 2024 (End of Notice Date). During this period Andrew will continue

toreceive his salary, pension and benefits, paid monthly (this includes the 3% increase

applied to his base salary, with effect from 1 October 2023). The salary, pension and

benefits received forthe 2022/23 FY are set out on page 79.

Payments made until the end of his notice period will be disclosed in the Remuneration

Report for FY2023/24, to be published in December 2024. In line with the remuneration policy,

Andrew has a duty to seek alternative employment and any outstanding payments will be

subject to offset against earnings from any new role.

The Remuneration Committee has used its discretion to determine the following approach to

outstanding incentive awards:

• FY 2023/24 bonus opportunity of 100% of salary, pro-rated for the period 1 October 2023

to 31 December 2023 (the end of the period of active employment) with 33% deferred

into shares in accordance with the bonus plan, to be determined, to the extent that it is

earned, at the end of the 2023/24 FY and paid at the normal time (in December 2024).

• Andrew will not be eligible for an LTIP grant in FY2023/24.

• Vested December 2019 LTIP (over 148,849 shares) to be released from the two-year

holding period at the normal time in accordance with the relevant rules (being

December 2024).

• Unvested December 2021 and 2022 LTIP awards (over 1,123,322 and 2,036,176 shares

respectively) to be pro-rated to the End of Notice Date to vest at the normal time (being

December 2024 and December 2025 respectively) based on the achievement of the

performance conditions together with any dividend equivalent payments. A two-year

post-vesting holding period will continue to apply in accordance with the condition of

the awards.

• Sharesave award over 40,909 shares to be treated in accordance with the

Sharesaverules.

• Andrew will remain subject to post-employment shareholding requirements.

All payments that have or will be received will be made within the terms of the termination

policy as set out in the Policy.

Payments to past Directors (audited)

No payments were made to past Directors above the de minimis threshold.

Total shareholder return chart and CEO remuneration history

This graph shows the value, at 30 September 2023, of £100 invested in the Company on

6October 2013 compared to the value of £100 invested in the FTSE All Share Index. The FTSE

All Share Index has been selected as a comparator because the Company is a member of

that index.

81Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Annual Report on Remuneration

The intermediate points show the value at the intervening financial period ends.

100

150

200

5 Oct

2013

4 Oct

2014

3 Oct

2015

1 Oct

2016

30 Sep

2017

29 Sep

2018

28 Sep

2019

3 Oct

2020

2 Oct

2021

Marston’s TSR

1 Oct

2022

30 Sep

2023

FTSE All Share TSR

The total remuneration of the CEO over the past ten financial periods is shown below. The

annual bonus pay-out and LTIP vesting level as a percentage of the maximum opportunity

is also shown.

Year Name

Total

remuneration

Annual bonus

(% of maximum)

LTIP vesting

(% of maximum)

2022/23 Andrew Andrea

656,725 0% 0%

2021/22 Andrew Andrea

783,654 14% 40%

2020/21 Ralph Findlay

711,612 0% 0%

2019/20 Ralph Findlay 592,423 0% 0%

2018/19 Ralph Findlay 722,432 0% 0%

2017/18 Ralph Findlay 807,665 17.7% 0%

2016/17 Ralph Findlay 803,303 20% 0%

2015/16 Ralph Findlay 1,008,320 40% 21%

2014/15 Ralph Findlay 876,788 40% 0%

2013/14 Ralph Findlay 1,121,294 25% 41.9%

1 Ralph Findlay stepped down from the Board and retired from the Group as CEO on 2 October 2021. Andrew

Andrea was appointed CEO from 3 October 2021 and stepped down from the Board and as CEO with effect

from 17 November 2023.

2 Restated to reflect the Total remuneration payable as set out on page 79.

3 The performance conditions were achieved at a level such that 11.2% of the 2016/17 LTIP would have vested.

However, the Executive Directors waived their rights to this award.

Change in remuneration of Directors’ and employee pay

The table below shows the percentage change in the Directors’ salary, benefits and annual

bonus over the last four financial years. This is then compared to the wider workforce. It was

agreed that all employees of the Group should be included in the comparison. Marston’s

PLC does not have any direct employees, as all employees within the Group are employed

by a wholly owned subsidiary company, Marston’s Trading Limited.

Wider

workforce

Andrew

Andrea

Hayleigh

Lupino

William

Rucker

Bridget

Lea

Octavia

Morley

Matthew

Roberts

Nick

Varney

Salary/

fees

2022/23 and

2021/22 4.7% 3% 3% 3% 3% 3% 3% 3%

2021/22 and

2020/21 11.10% 53%

N/A 3% 2.70% 8.70% 6.50% N/A

2020/21 and

2019/20 2.90% 2% N/A 0% 0% 0% 0% N/A

2019/20 and

2018/19 6.40% 2% N/A 0% N/A N/A 0% N/A

Taxable

benefits

2022/23 and

2021/22

See

note 4 0% 0% – – – – –

2021/22 and

2020/21

See

note 4 18.70% N/A – – – – –

2020/21 and

2019/20

See

note 4 5.8% N/A – – – – –

2019/20 and

2018/19

See

note 4 (6.3%) N/A – – – – –

Annual

bonus

2022/23 and

2021/22

See

note 5 (100%) N/A – – – – –

2021/22 and

2020/21

See

note 5 100% N/A – – – – –

2020/21 and

2019/20

See

note 5 0% N/A – – – – –

2019/20 and

2018/19

See

note 5 0% N/A – – – – –

Notes:

1 Salary/fee reviews for the Executive Directors, Non-executive Directors, and salaried workforce are effective

1October. However, whilst Marston’s accounting reference date is 30 September, the Group reports on a

52-week basis and, therefore, the period end date changes from year to year. The year-on-year comparisons in

the table above are based on the salaries/fees applying with effect from 1 October. Average employee

change to salary is calculated by reference to the mean of employee pay. The majority of pub-based

employees have their remuneration set by statute rather than the market.

82 Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Annual Report on Remuneration

Notes continued:

2 Explanations for large increases in prior years are provided in the previous Annual Reports.

3 Where the incumbent did not serve for the full year, the calculation has not been made as it is

unrepresentative. Hayleigh Lupino was appointed CFO effective from 3 October 2021. Nick Varney was

appointed Non-executive Director to the Board with effect from 1 July 2022.

4 No changes to benefit policy. Premiums for private medical insurance may vary from year to year.

Eligibilityto receive the individual benefits under the policy may be determined by an employee’s role

orlength of service, where applicable.

5 No bonuses were payable in respect of 2022/23, based on Group performance, therefore a comparison

with bonuses earned in respect of 2021/22 is not meaningful. Bonuses and other discretionary payments

were earned by a number of employees, within the wider workforce during the reporting period.

CEO pay ratio

The tables below show how the CEO’s single total figure of remuneration compares with the

equivalent figures for UK employees whose remuneration was ranked at the 25th percentile,

50th percentile, and 75th percentile.

Year Method

25th

percentile

pay ratio

50th

percentile

pay ratio

75th

percentile

pay ratio

2022/23 Option B 36:1 34:1 31:1

2021/22 Option B 46:1 45:1 40:1

2020/21 Option B 47:1 44:1 43:1

2019/20 (based on contractual salary and benefits) Option B 48:1 45:1 41:1

2019/20 (reflecting voluntary reduction in salary

andbenefits) Option B 40:1 37:1 34:1

Note:

Andrew Andrea was appointed CEO from 3 October 2021. Pay ratio calculations, prior to the 2021/22 financial year

are assessed against Ralph Findlay’s total remuneration, who stepped down from the Board on 2 October 2021.

Component

CEO

25th

percentile

50th

percentile

75th

percentile

Base salary 620,626 18,346 19,146 21,021

Total remuneration 656,725 18,346 19,146 21,021

We have chosen Option B which uses the hourly rate data from the most recent Gender

Pay Gap reporting. This represents the most efficient and robust method to determine the

respective pay ratios. The 2023 gender pay gap data is used to identify the employees

falling at the relevant percentile. Total remuneration is then calculated for 2022/23. To

ensure year-on-year methodology and reporting is consistent, we have removed any

variances in the total remuneration package for employees sitting at each of the

percentiles as, for example, not all employees contribute to a pension scheme or receive

abonus. Necessary adjustments are then made to ensure that the 25th, median and 75th

percentile employees are reasonably representative for the 2022/23 financial year.

Theemployee percentiles were determined by reference to 5 April 2023.

Two sets of pay ratios are included in the table above for 2019/20, reflecting Ralph Findlay’s

voluntary reduction in salary and benefits during the period from April to July 2020 and his

contractual salary and benefits for 2019/20.

The ratio remained relatively stable between 2019/20 and 2021/22. For 2022/23, the ratio has

decreased as there is no payout under the incentive schemes which has more of an impact on

the CEO figure as the reduction in remuneration is greater than the reduction for the workforce.

A substantial proportion of the CEO’s total remuneration is performance-related and delivered

in shares. The ratios will depend significantly on the CEO’s annual bonus and long-term

incentive outcomes and may fluctuate year-on-year. The Company considers the median pay

ratio is consistent with the Group’s wider policies on employee pay, reward and progression.

Relative importance of spend on pay

The table below demonstrates the relative importance of the Group’s expenditure on total

employee pay compared to dividend payments to shareholders.

2022/23 2 021/22 % change

Dividend payments

£0m £0m –

Total employee pay

£210.6m £214.0m (1.6%)

1 No distributions by way of share buybacks were made to shareholders during the 2022/23 or 2021/22

financial years.

2 Excluding non-underlying items.

3 The decrease in total employee pay is predominately due to the headcount reduction at our Pub Support

Centre, as set out on page 5 in the report.

83Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Corporate Governance report continued

Annual Report on Remuneration

External appointments for Executive Directors

Executive Directors are permitted to take up external appointments, subject to approval bythe Board, and are allowed to retain any fees received.

Directors’ share interests (audited)

Each Executive Director is required to build and retain a shareholding with a value equal to two times salary. To achieve these holdings under the current policy, Directors are required to

retain 50% of the net of tax shares they receive under the annual bonus and LTIP, until the guidelines are satisfied. Shares subject to vested LTIP awards which are in a holding period count

towards this guideline (on a net of assumed tax basis) and deferred bonus shares also count towards the shareholding guideline.

As at 30 September 2023, Andrew Andrea held shares worth 85% of base salary and Hayleigh Lupino held 23% of base salary in shares.

In assessing the extent to which the guidelines are satisfied, shares are valued at the end of the relevant financial year. Once the required holding has been achieved, any change in the

share price is disregarded when assessing the value attributed to shares already held.

Executive Directors’ share interests as at 30 September 2023

Shares owned outright

Share options

Not subject to performance Subject to performance

Shareholding

requirement

(% of salary)

Actual %

of salary

holdingExecutive Director At 30.09.23 At 01.10.22 Unvested

Vested but

unexercised Unvested

Vested but

unexercised

Andrew Andrea 454,032 390,773 40,909 148,849 3,669,793 – 200% 85%

Hayleigh Lupino 168,388 104,629 71,038 17,550 1,881,362 – 200% 23%

1 The table above includes the holdings of persons connected with each of the Directors.

2 All scheme interests are structured as nil-cost or tax-advantaged options.

3 The 40,909 unvested options are Sharesave options.

4 Of the 71,038 share options, 40,909 are Sharesave options.

84 Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Annual Report on Remuneration

Executive Directors’ interests in share options as at 30 September 2023

Grant

date

Brought

forward

01.10.22 Granted

Exercised

/vested

Cancelled

/lapsed

Carried

forward

30.09.23

Exercise

price £

Vesting

date

Release

date

Andrew

Andrea

LTIP 2019

372,124 – 148,849 223,275 148,849 Nil 2022 2024

May

2021

510,295 – – – 510,295 Nil 2024 N/A

Dec

2021

1,078,580 – – – 1,078,580 Nil 2024 2026

44,742 – – – 44,742 £0.6507 2024 2026

2022

– 2,036,176 – – 2,036,176 Nil 2025 2027

Share-

save

June

2022 40,909 – – – 40,909 £0.44 2025 N/A

Hayleigh

Lupino

LTIP

2019 43,875 – 17,550 26,325 17,550 Nil 2022 2024

May

2021

75,324 – – – 75,324 Nil 2024 N/A

Dec

2021

675,336 – – – 675,336 Nil 2024 2026

44,742 – – – 44,742 £0.6507 2024 2026

2022

– 1,085,960 – – 1,085,960 Nil 2025 2027

Share-

save

June

2022 40,909 – – – 40,909 £0.44 2025 N/A

Deferred

bonus

May

2021 30,129 – – – 30,129 Nil 2024 2024

1 Awards granted annually in December, unless otherwise stated.

2 The performance conditions applying to the 2019/20 LTIP are set out on page 67 of the 2020 Directors’

Remuneration Report.

3 The performance conditions applying to the 2020/21 LTIP are set out on page 67 of the 2021 Directors’

Remuneration Report.

4 The performance conditions applying to the 2021/22 LTIP are set out on page 67 of the 2021 Directors’

Remuneration Report.

5 The performance conditions applying to the 2022/23 LTIP are set out on page 94 of the 2022 Directors’

Remuneration Report.

6 The exact release date will be confirmed when the date of the relevant preliminary results announcement is

known and the associated closed period ends.

7 The 2019 LTIP vested on 12 December 2022. No options were exercised during the year.

Andrew Andrea cancelled his 2022 Sharesave option on 20 November 2023. The option

over 40,909 shares lapsed on that date. There have been no further changes to the

Directors’ share interests and interests in share options between 30 September 2023 and

1December 2023 (being the latest practical date prior to the date of this report).

Implementation of the Policy in 2023/24

The section below sets out the implementation of the Remuneration Policy in 2023/24 which

has been set in line with the Remuneration Policy approved by shareholders at the 2023 AGM.

As stated in the Chair’s Annual statement on page 73, the Committee concluded that the

incoming CEO should be given time to review the proposed targets for the annual bonus and

LTIP scheme. Therefore, some elements of implementation (such as the incentive targets) will

be finalised early in the new calendar year and disclosed in the 2023/24 report.

Base salary

During the year, the Committee reviewed the salary increases for the wider salaried workforce

taking into account the continuing cost of living challenges and the need to control our cost

base. As a result of the review, the majority of the wider salaried workforce received an

increase of between 3% and 4% of salary. Therefore, with an increase of 4% applied to the

majority of the salaried workforce, the Committee was comfortable with a lower increase of 3%

for the CFO (and departing CEO).

Base salary 2022/23

Base salary 2023/24

Justin Platt (incoming CEO) N/A 600,000

Andrew Andrea (departing CEO) 620,626 639,245

Hayleigh Lupino (CFO) 397,837 409,773

Note:

The majority of the wider workforce (pub-based employees) have their remuneration set by statute rather than

the market.

85Marston’s PLC Annual Report and Accounts 2023

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Corporate Governance report continued

Annual Report on Remuneration

Annual bonus

In line with the package agreed on appointment, Justin will be eligible for an annual bonus

of up to 125% of salary (pro-rated for the period of his employment). The annual bonus

opportunity for Hayleigh will remain at 100% of salary, in line with the previous year.

Performance measures remain unchanged and are aligned to our strategic objectives and

core pub and corporate goals.

Strategic pillar

Performance

measure

% Weighting for

2023/24

We will grow Group EBITDA 30%

Free cash flow 20%

Group sales 20%

We are guest obsessed Reputation

score 15%

We raise the bar Employee

engagement 15%

The Directors consider that the annual bonus targets for the 2023/24 financial year are

commercially sensitive. The Committee will continue to disclose how the bonus pay-out

delivered relates to performance against the targets in next year’s report.

One third of any bonus paid will be deferred into shares which must be held for three years.

LTIP

The maximum grant limit under the current policy remains at 150% of base salary and in line

with his agreement to join Marston’s, the incoming CEO will receive an LTIP grant of 150% of

salary. It is anticipated that the CFO will receive an LTIP award of 125% of salary, in line with

the normal policy level, provided that the share price at the time of grant is broadly

consistent with the share price used for last year’s award. The LTIP will be subject to

Underlying PBT (20%), net cash flow (40%), Operating margin (20%) and relative Total

Shareholder Return (20% performance measures. Operating margin has replaced ROCE

and there has been an increase in the weighting of the cashflow measure, in line with our

strategic priorities set out in the Strategic report. The Committee will undertake a final

review of LTIP quantum, alongside the targets, prior to grant. Full details of the performance

conditions and grant level for the CFO will be disclosed in the regulatory news

announcement that will be made following the grant of options.

Non-executive Director remuneration

A 3% increase will be applied to the base fee, and additional fees, for Non-executive

Directors and the Chair’s fee (in line with the increase for the CFO and below that of the

wider workforce). The fees that will apply from 1 October 2023 are set out below.

2023/24 2022/23

Chair’s fee £218,545 £212,180

Non-executive Director basic fee £58,880 £57,165

Additional fee for:

Chairing the Audit Committee £10,609 £10,300

Chairing the Remuneration Committee £10,609 £10,300

Senior Independent Director £10,609 £10,300

Approval

This Remuneration report was approved by the Board of Directors on 5 December 2023 and

signed on its behalf by the Remuneration Committee Chair:

Ocavia Morley

Chair of the Remuneration Committee

5 December 2023

86 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

This section contains additional information which the Directors are required by law and

regulation to include within the Annual Report and Accounts. This section, along with

theinformation from the Chair’s statement on page 3, to the Statement of Directors’

responsibilities on page 91, constitutes the Directors’ report in accordance with the

Companies Act 2006.

Strategic report

The Company is required by the Companies Act to include a Strategic report in this

document. The information that fulfils the requirements of the Strategic report can be

foundon pages 1 to 53, which is incorporated in this report by reference.

Corporate Governance Statement

The Corporate Governance Statement, as required by the Financial Conduct Authority’s

Disclosure Guidance and Transparency Rules (DTR) 7.2.1, is set out on page 55 and is

incorporated into this report by reference.

Dividends

The Board confirms that given the continued macroeconomic uncertainty, and the priority

to reduce the overall level of borrowing, no dividends will be paid in respect of financial

year 2022/23. The Board is cognisant of the importance of dividends to shareholders and

intends to keep potential future dividends under review.

Directors

Biographies of the Directors currently serving on the Board are set out on pages 56 and 57.

Changes to the Board during the period are set out in the Corporate Governance report

on pages 64 to 65. Details of Directors’ service contracts are set out in the Directors’

Remuneration report on page 77. With regard to the appointment and replacement

ofDirectors, the Company is governed by its Articles of Association, the UK Corporate

Governance Code, the Companies Act 2006 and related legislation. The Articles may be

amended by special resolution of the shareholders. In accordance with the requirements

of the UK Corporate Governance Code, all Directors will offer themselves for election or

re-election at the AGM on 23 January 2024, with the exception of Matthew Roberts.

Directors’ shareholdings

The interests of Directors and their connected persons in the shares of the Company are set

out on pages 81 and 84 of the Directors’ Remuneration report.

Directors’ indemnities and insurance

The Company maintains Directors’ and Officers’ Liability Insurance in respect of legal

action that might be brought against its Directors and Officers. In accordance with the

Company’s Articles of Association and to the extent permitted by law, the Company has

indemnified each of its Directors and other Officers of the Group against certain liabilities

that may be incurred as a result of their position within the Group. These indemnities were in

place for the whole of the period ended 30 September 2023, and as at the date of the

report. There are no indemnities in place for the benefit of the external Auditor.

Directors’ powers

Under the Articles of Association, the Directors have authority to allot ordinary shares

subject to the aggregate set at the 2023 Annual General Meeting (AGM). The Company

was also given authority at its 2023 AGM to make market purchases of ordinary shares up

toa maximum number of 63,414,851 shares. Similar authority will again be sought from

shareholders at the 2024 AGM. The powers of the Directors are further described in the

Corporate Governance Report on pages 54 to 86.

Share capital and shareholder voting rights

Details of the Company’s issued share capital and of the movements during the period are

shown in note 28 in the financial statements on page 139. The Company has one class of

ordinary shares and one class of preference shares. On a poll vote, ordinary and preference

shareholders have one vote for every 25 pence of nominal value of ordinary and preference

share capital held in relation to all circumstances at general meetings of the Company. The

issued nominal value of the ordinary shares and preference shares is 100% of the total issued

nominal value of all share capital.

There are no specific restrictions on the size of a holding nor on the transfer of shares,

whichare both governed by the general provisions of the Articles of Association and

prevailing legislation. The Directors are not aware of any agreements between holders

ofthe Company’s shares that may result in restrictions on the transfer of securities or on

voting rights.

Corporate Governance report continued

Directors’ report

87Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Details of employee share schemes are set out in note 27 to the financial statements on

page 138. Where shares are held on behalf of the Company’s share schemes, the trustees

have waived their right to vote and to dividends.

No person has any special rights of control over the Company’s share capital and all issued

shares are fully paid.

Significant shareholders

Notifications of the following voting interests in the Company’s ordinary share capital have

been received by the Company (in accordance with DTR 5). The information shown below

was correct at the time of disclosure. However, the date received may not have been

within the current financial reporting period and the percentages shown (as provided at

the time of disclosure) have not been recalculated based on the issued share capital at the

period end. It should also be noted that these holdings may have changed since the

Company was notified; however, notification of any change is not required until the next

notifiable threshold is crossed.

Subsequent to the year-end, Bayberry Capital Partners LP has disclosed information

inaccordance with DTR 5 on 21 November 2023, disclosing an indirect interest over

9,175,975voting rights (4.91%). On 30 November Morgan Stanley also disclosed information

disclosing an indirect interest over 13,020,150 voting rights (6.94%). No further notifcations

have been received by the Company between 1 October 2023 and 1 December 2023

(being the latest practical date prior to the date of this report).

As at 30 September 2023

Shareholder

Voting

rights

% of voting

rights

Aberforth Partners LLP 9,859,977 5.27

HSBC Holdings plc 9,558,166 5.10

Bayberry Capital Partners LP 9,410,500 5.03

Morgan Stanley 10,959,908 5.84

Momentum Global Investment Management Ltd 9,385,993 5.02

Dimensional Fund Advisors LLP 9,339,455 4.98

Coltrane Asset Management 9,355,366 5.00

ClearBridge Investments Limited 9,307,805 4.98

The Capital Group Companies, Inc 9,291,379 4.96

Standard Life Aberdeen plc 9,228,860 4.93

Brewin Dolphin 8,392,338 4.93

Sand Grove Capital Management 8,456,440 4.52

Royal London Asset Management Limited 6,794,023 3.99

The Welcome Trust Limited 5,731,036 3.06

Preference shares

The Company also discloses the following information, obtained from the Register

ofMembers, for the preference shares:

Shareholder

Number of

% of Issued

Capital

Fiske Nominees Limited 31,548 42.06

Mrs Heather Mabel Medlock 10,407 13.88

George Mary Allison Limited 5,500 7.33

Rulegale Nominees Limited 4,550 6.07

Mr Nathanael Peter Knowles 4,356 5.81

Mr Neil Aston and Mr Thomas Alexander Southall 2,855 3.81

Cgwl Nominees Limited 2,805 3.74

Mrs Helen Michels 2,750 3.67

Mr Richard Somerville 2,750 3.67

Change of control

There are a number of agreements that take effect after, or terminate upon, a change of

control of the Company, such as commercial contracts, bank loan agreements, property lease

arrangements and employee share plans. None of these are considered to be significant in

terms of their likely impact on the business as a whole. Furthermore, the Directors are not aware

of any agreements between the Company and its Directors or employees that provide for

compensation for loss of office or employment that occurs because of a takeover bid.

Corporate Governance report continued

Directors’ report

88 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Employee information

The average number of employees within the Group is shown in note 5 to the financial

statements on page 118. We want everyone to feel that they can be themselves at

Marston’s and not feel judged; that is when we know we are at our best. Our pubs are the

heart of our communities and it is the people in our pubs that make them what they are.

We have a responsibility to create and foster safe environments where our teams and

guests feel a sense of belonging, feel respected and feel valued for who they are.

We want Marston’s to be a place where our teams:

• relate to, feel represented by, and trust each other;

• feel valued and supported;

• feel involved in the bigger picture;

• are appreciated as individuals;

• communicate openly, have a voice, and are listened to.

We are taking steps to ensure that everyone feels included. That means creating a culture

where we embrace different perspectives, backgrounds and ideas. Above all, we want our

pubs and Pub Support Centre to be a place where everyone feels like they can be themselves.

We want to make sure our culture is inclusive. We started our movement in January 2022

when we formed an Inclusion Taskforce, chaired by Hayleigh Lupino, our Chief Financial

Officer. The Inclusion Taskforce engages directly with our Board and senior leaders to share

insight, challenges and solutions. The group comprises a mix of people with a passion for

inclusion, who have similar beliefs, backgrounds or interests, some are allies. The Inclusion

Taskforce provides input into our overall approach to diversity and inclusion and ensures we

deliver what we set out to build: a community of networks, safe spaces for safe discussions

that also lead to positive actions and outcomes. More information can be found on page 64

and in our Insight Report.

Human rights

Marston’s is committed to respecting and upholding human rights, as expressed

intheUnited Nations Universal Declaration of Human Rights, within our business

andalsowithin our supply chain. Our behaviours are aligned with our belief in,

andcommitment to, the Declaration of Human Rights. Our Human Rights Policy is

availableatwww.marstonspubs.co.uk/responsibility and, for our suppliers, more

informationcan be found in our Food Supplier Charter, also available on our website.

Modern Slavery Statement

Our Modern Slavery Act disclosure is available on our website www.marstonspubs.co.uk.

Research and development

Our Director of Insights and his team regularly undertake internal research and analysis

such as guest satisfaction surveys and panelling, together with working with third-party

independent data providers with expertise in retail and hospitality, including CGA

andReputation.

Greenhouse gas emissions, energy consumption and energy

efficientaction

One of our key priorities is to reduce our environmental impact. We recognise the

importance of this to the long-term profitability of the business and operating a high-

quality estate. Many of the environmental initiatives we adopt reduce our environmental

impact as well as saving expenditure on energy and utilities. More details of how we are

reducing our environmental impact can be found on pages 26 to 39 in our Strategic report

and our Insight report.

Political donations

Our policy is not to make any donations for political purposes in the UK or to donate

toEUpolitical parties or incur EU political expenditure.

Financial instruments

The disclosures required in relation to the use of financial instruments by the Group,

together with details of our treasury policy and management, are set out in note 25 to the

financial statements on pages 132 to 138.

Corporate Governance report continued

Directors’ report

89Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Auditor

During the year, the Group conducted a comprehensive tender process for an external

Auditor. KPMG were invited to tender alongside other firms, including mid-tier audit firms.

The tender process was managed by the Company’s Director of Financial Reporting &

Taxand each of the firms received a formal invitation to tender. They spent time with the

AuditCommittee Chair, the CFO, the CEO and senior management. Written proposals

weresubmitted and the top two firms gave oral presentations to the panel. Following

therigorous process, the Audit Committee recommended the appointment of RSM UK

Audit LLP as the Company’s new external Auditor after the conclusion of the 2022/23 audit.

Going concern

The Group’s business activities, together with the factors likely to affect its future

development, performance and position, are set out in the Strategic report. The financial

position of the Group is described on pages 12 to 15. Further details are set out in the

financial statements on pages 100 to 153. In addition, note 25 to the financial statements on

pages 132 to 138 includes the Group’s objectives, policies and processes for managing its

exposures to interest rate risk, foreign currency risk, counterparty risk, credit risk and liquidity

risk. Details of the Group’s financial instruments and hedging activities are also provided in

note 25. The financial statement set out on pages 100 to 142 and 143 to 153 have been

prepared on the going concern basis.

Annual General Meeting (AGM)

The 2024 AGM will be held at The Farmhouse at Mackworth in Derby on Tuesday 23 January

2024. Shareholders are once again welcome to attend the meeting in person, but we ask

that you register your intention to attend ahead of time so we can monitor numbers in

readiness for the meeting. Shareholders are able to ask questions ahead of the meeting,

using the dedicated email address agm@marstons.co.uk if they are unable to attend in

person. We will ensure that each question receives a direct response, with those questions

pertinent to the business of the meeting available on request from the above email address.

To enable all shareholders to vote on all resolutions in proportion to their shareholding,

thevoting at the 2024 AGM will be conducted by way of a poll and shareholders are

encouraged to vote as early as possible ahead of the meeting. The Company will release

the results of voting, including proxy votes on each resolution, on its website on the next

business day after the AGM and announce them through a regulatory news service. Details

of how you can submit questions and cast your votes at the AGM are set out in the Notice

of Meeting, which will be made available to shareholders by their chosen method of

communication and is also available on our website.

Further details can be found in the notice convening the meeting. The notice, together with

details of the special business to be considered and explanatory notes for each resolution,

is distributed separately to shareholders. It is also available on the shareholder section

ofour website at www.marstonspubs.co.uk/investors where a copy can be viewed

anddownloaded.

By order of the Board

Bethan Raybould

General Counsel & Company Secretary

5 December 2023

Company registration number: 31461

Corporate Governance report continued

Directors’ report

90 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

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 UK-adopted international accounting standards

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.

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 UK-adopted international accounting standards;

• 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 comply 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.

In accordance with Disclosure Guidance and Transparency Rule 4.1.14R, the financial

statements will form part of the Annual Report prepared using the single electronic

reporting format under the TD ESEF Regulation. The auditor’s report on these financial

statements provides no assurance over the ESEF format.

Responsibility statement of the Directors in respect of the Annual Report:

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.

Hayleigh Lupino

Chief Financial Officer

5 December 2023

Statement of Directors’ responsibilities

in respect of the Annual Report and the Financial Statements

91Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 OUR OPINION IS UNMODIFIED

We have audited the financial statements of Marston’s PLC (‘the Company’) for the 52

week period ended 30 September 2023 which comprise the Group Income Statement,

Group Statement of Comprehensive Income, Group Cash Flow Statement, Group Balance

Sheet, Group Statement of Changes in Equity, Company Balance Sheet, Company

Statement of Changes in Equity, and the related notes, including the accounting policies in

note 1 to both the Group and parent Company financial statements.

In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the

parent Company’s affairs as at 30 September 2023 and of the Group’s profit for the

period then ended;

• the Group financial statements have been properly prepared in accordance UK-

adopted international accounting standards;

• the parent Company financial statements have been properly prepared in accordance

with UK accounting standards, including FRS 102 The Financial Reporting Standard

applicable in the UK and Republic of Ireland; and

• the financial statements have been prepared in accordance with the requirements of

the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK)

(‘ISAs(UK)’) and applicable law. Our responsibilities are described below. We believe that

the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Our audit opinion is consistent with our report to the Audit Committee.

We were first appointed as auditor by the shareholders on 24 January 2020. The period of

total uninterrupted engagement is for the four financial periods ended 30 September 2023.

We have fulfilled our ethical responsibilities under, and we remain independent of the

Group in accordance with, UK ethical requirements including the FRC Ethical Standard as

applied to listed public interest entities. No non-audit services prohibited by that standard

were provided.

Overview

Materiality:

Group financial statements as a whole

£7.0 million (2022: £12.3 million)

0.8% of revenue (2022: 0.5% of total assets)

Coverage 100% (2022: 100%) of Group total revenue

Key audit matters vs 2022

Recurring risks Going concern 

Valuation of effective freehold land and buildings 

Carrying value of CML investment 

Independent auditor’s report

to the members of Marston’s PLC

92 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

2 MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

The risk Our response

Going Concern

We draw attention to note 1 to the financial statements which

indicates that in the severe but plausible downside scenario the

Group’s and the parent Company’s ability to continue as a

going concern is dependent on the ability to achieve covenant

waivers or amendments if required.

These events and conditions, along with the other matters

explained in note 1, constitute a material uncertainty that may

cast significant doubt on the Group’s and the parent

Company’s ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

Refer to page 70 Audit Committee Report and page 110

accounting policy.

Disclosure quality

The financial statements explain how the Board has formed a

judgement that it is appropriate to adopt the going concern

basis of preparation for the Group and parent Company.

That judgement is based on an evaluation of the inherent risks to

the Group’s and parent Company’s business model and how

those risks might affect the Group’s and parent Company’s

financial resources or ability to continue operations over a

period of at least a year from the date of approval of the

financial statements.

There is little judgement involved in the Directors’ conclusion

that risks and circumstances described in note 1 to the financial

statements represent a material uncertainty over the ability of

the Group and the parent Company to continue as a going

concern for a period of at least a year from the date of

approval of the financial statements.

However, clear and full disclosure of the facts and the Directors’

rationale for the use of the going concern basis of preparation,

including that there is a related material uncertainty, is a key

financial statement disclosure and so was the focus of our audit

in this area. Auditing standards require that to be reported as a

key audit matter.

Our procedures included:

• Assessing transparency: We critically assessed the adequacy

of the Group’s disclosures in relation to the material

uncertainty over going concern.

• Funding Assessment: We inspected correspondence with

Credit Providers and board minutes during the period and

after period-end to the date of authorisation of the Annual

Report to identify any indications that Credit Providers may

notcontinue to support the Group in the severe but plausible

downside scenario through covenant amendments.

• Historical comparison: We compared forecast results for

previous periods with the actual experience of previous

periods to assess the Group’s ability to accurately forecast;

• Key dependency assessment: We evaluated the Group’s

covenant and cash flow projections and their underlying

assumptions by reference to our knowledge of the business,

the Credit Agreements and available facilities to the Group;

• Sensitivity analysis: We considered whether the Group would

have sufficient cash headroom and require covenant waivers in

the forecast period in a severe but plausible downside scenario

that reflected the plausible impact of the cost-of-living crisis on

the business;

• Our experience: To assess the likelihood that the Credit

Providers will not agree covenant amendments we used our

knowledge of current market conditions and similar covenant

amendments and waivers agreed between the Group and

Credit Providers in previous periods;

• Benchmarking assumptions: We evaluated whether there is

adequate support for the assumptions underlying the Directors’

base case forecast and in a severe but plausible downside

scenario we evaluated the assumptions and mitigations

available, whether they are realistic and achievable and

consistent with the external and/or internal environment and

other matters identified in the audit.

• Evaluating directors’ intent: We evaluated the cashflow forecasts

to assess the controllable mitigations available to the Group such

as deferring discretionary costs to improve cash headroom if

required in a severe but plausible downside scenario.

Our results

We found the going concern disclosure in note 1 with a material

uncertainty to be acceptable (2022: acceptable).

Independent auditor’s report continued

to the members of Marston’s PLC

93Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

3 OTHER KEY AUDIT MATTERS: INCLUDING OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of

material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and

directing the efforts of the engagement team. Going concern is a significant key audit matter and is described in section 2 of our report. We summarize below the other key audit matters, in

decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our

results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial

statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

The risk Our response

Valuation of effective freehold land and buildings

(Group – £1.645.1 million; 2022: £1,682.4 million

Downwards revaluation: £24.3 million;

2022:Upwardsrevaluation£75.1 million)

(Parent company -£184.1 million; 2022: £192.7 million

Downwards Revaluation: £11.5 million;

2022:UpwardsRevaluation£19.6 million)

Refer to page 69 Audit Committee Report, page 112

accountingpolicy and page 123 financial disclosures.

Subjective Valuation

The valuation of the Group’s and the parent

Company’s freehold land and buildings and ‘effective

freehold’ leasehold properties held at fair value is a

key area of estimation.

The valuation involves the determination of key

assumptions, most noticeably the fair maintainable

trade (FMT) and applicable trading multiples.

These assumptions are inherently subjective and small

changes inthe assumptions used to value the Group’s

and the parent Company’s land and buildings could

have a significant effect on the strength of the Group’s

and parent Company’s balance sheet.

The effect of these matters is that, as part of our

riskassessment, wedetermined that valuation of the

effective freehold land and buildings has a high degree

ofestimation uncertainty, with a potential range of

reasonable outcomes greater than our materiality for

the financial statements as a whole, and possibly many

times that amount. The financial statements (note 11)

disclose the range estimated by the Group.

Our procedures included:

• Assessing valuation approach: We met with the Group’s external valuers

tounderstand the assumptions and methodologies used in valuing the

properties and the market evidence used by the external valuers to

supporttheir assumptions. We also obtained an understanding of the

directors’ involvement in the valuation process to assess whether

appropriateoversight has occurred;

• Assessing valuer’s credentials: We critically assessed the independence,

professional qualifications, competence and experience of the external

valuers engaged by the Group;

• Benchmarking assumptions: We challenged the key assumptions, being the

FMT and trading multiples, with the assistance of our own KPMG valuation

specialists by making a comparison to market comparable data;

• Assessing inputs: We vouched observable inputs including the trading

performance data used for a sample of assets in the valuation to source

documentation;

• Assessing outputs: We evaluated and challenged the output of the

valuations through the identification of higher risk assets with the assistance

of our own valuation specialists;

• Assessing transparency: We critically assessed the adequacy of the Group’s

disclosures in relation to the valuation of the effective freehold land and

buildings and the sensitivity of changes in the key assumptions.

We performed the detailed tests above rather than seeking to rely on any of

theGroup’s controls because our knowledge of the design of these controls

indicated that we would not be able to obtain the required evidence to

supportreliance on controls.

Our results

We performed an assessment of whether an overstatement of the valuation of

the effective freehold land and buildings identified through these procedures

was material. Overall we found the valuation of the effective freehold land and

buildings to be acceptable (2022:acceptable).

Independent auditor’s report continued

to the members of Marston’s PLC

94 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

3 OTHER KEY AUDIT MATTERS: INCLUDING OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT CONTINUED

The risk Our response

Carrying Value of CML Investment

(£250.9 million; 2022: £260.3 million)

Refer to page 70 Audit Committee Report, page 111

accountingpolicy and page 126 financial disclosures.

Forecast-based assessment

The Group holds an investment inassociatenamed

Carlsberg Marston’s Limited (‘CML’). Theinvestment is

significant and at risk of impairment due totheincrease

in market interest rates and uncertain macroeconomic

environment impacting the brewing sector. The

estimated recoverable amount is subjective due to the

inherent uncertainty involved in forecasting and

discounting future cashflows.

The effect of these matters is that, as part of our risk

assessment, for audit planning purposes, we determined

that the carrying value of investment in CML has a high

degree of estimation uncertainty, with a potential range

of reasonable outcomes greater than our materiality for

the financial statements as a whole. In conducting our

final audit work, we concluded that reasonably possible

changes to the recoverable amount of investment in

CML would not be expected to result in material

impairment.

Our procedures included:

• Assessing component audit: We assessed the work performed bythe associate

audit team on the in scope component and considered the results of that work

on the associate’s investmentvalue;

• Historical comparisons: We evaluated the historical accuracy of the Group’s

forecasting against actual results in the period.

• Our sector experience: We compared the Group’s discount rate used to

arrive at the recoverable amount with our own calculation of the discount

rate based on our valuations experience and knowledge of the sector.

• Sensitivity analysis: We evaluated the appropriateness and likelihood of the

Group’s sensitivities and their impact of the overall impairment test outcome

and performed our own additional sensitivity analysis.

• Assessing transparency: We critically assessed the adequacy of the Group’s

disclosures in relation to the carrying value of the investment in associate.

We performed the detailed tests above rather than seeking to rely on any

oftheGroup’s controls because the nature of the balance is such that we

would expect to obtain audit evidence primarily through the detailed

procedures described.

Our results

We found the Group’s conclusion that there is no impairment of the carrying

value of the investment to be acceptable (2022: acceptable).

Independent auditor’s report continued

to the members of Marston’s PLC

4 OUR APPLICATION OF MATERIALITY AND AN OVERVIEW

OFTHESCOPEOF OUR AUDIT

Materiality for the Group financial statements as a whole was set at £7.0 million, determined

with reference to a benchmark of Revenue (of which it represents 0.8%. In the prior period,

materiality for the Group financial statements as a whole was set at £12.3 million, determined

with reference to a benchmark of Group total assets, of which it represented 0.5%. In addition,

in the prior period, we applied materiality of £3.5 million to specific Group income statement

items such as revenue and underlying operating costs.

We consider revenue to be the most appropriate benchmark in the current period given

that it is the best reflection of the cash generation of the group, is a stable benchmark and

reflects the return of the business to post-pandemic trading and will therefore be a focus of

users of theaccounts.

Materiality for the parent Company financial statements as a whole was set at £6.9 million

(2022: £9.0 million), determined with reference to a benchmark of parent Company total

assets, of which it represents 0.5% (2022: 0.7%).

In line with our audit methodology, our procedures on individual account balances

anddisclosures were performed to a lower threshold, performance materiality, so as to

reduce to an acceptable level the risk that individually immaterial misstatements in individual

account balances add up to a material amount across the financial statements as a whole.

Performance materiality was set at 75% (2022: 75%) of materiality for the financial statements

as a whole, which equates to £5.3 million (2022: £9.1 million) for the Group and £5.2 million

(2022: £6.8 million) for the parent Company. We applied this percentage in our determination

of performance materiality because we did not identify any factors indicating an elevated

level of risk.

We agreed to report to the Audit Committee any corrected or uncorrected identified

misstatements exceeding £0.4 million (2022: £0.6 million), in addition to other identified

misstatements that warranted reporting on qualitative grounds.

We subjected the Group’s only associate CML to a full scope audit as we determined it was

financially significant. Materiality was set at £7.0 million (2022: £5.5 million) based on its

relative size adjusting for Marston’s 40% share in the business.

95Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Group revenue £872.3 million

Group materiality

£7.0 million

Total revenue

£0.4 million

Misstatements reported to the Audit Committee

Group materiality

£7.0 million

Component materiality for Carlsberg Marston's Limited

£5.3 million

Whole ﬁnancial statements performance materiality

£7.0 million

Whole ﬁnancial statements materiality

Group revenue

Full scope for Group audit purposes 2023

100%

(2022: 100%)

100%

(2022: 100%)

100%

(2022: 100%)

Group proﬁt before tax

Group total assets

Full scope for Group audit purposes 2022

4 OUR APPLICATION OF MATERIALITY AND AN OVERVIEW

OFTHESCOPEOF OUR AUDIT CONTINUED

A component auditor was instructed to carry out a full scope audit of CML. We also asked

the component auditor to perform specific procedures on the cash flow forecasts of the

component. We used that work to audit the Group’s own impairment review of the

investment in its associate.

The Group team performed the audit of the Group as if it was a single aggregated set of

financial information. The audit was performed using the materiality and performance

materiality level set out above.

The scope of the audit work performed was predominantly substantive as we placed

limited reliance upon the Group’s internal control over financial reporting.

5 GOING CONCERN BASIS OF PREPARATION

The Directors have prepared the financial statements on the going concern basis as they

do not intend to liquidate the Group or the parent Company or to cease their operations,

and as they have concluded that the Group and the parent Company’s financial position

means that this is realistic for at least a year from the date of approval of the financial

statements (‘the going concern period’). As stated in section 2 of our report, they have also

concluded that there is a material uncertainty related to going concern.

An explanation of how we evaluated management’s assessment of going concern is set

out in section 2 of our report.

Our conclusions based on this work:

• We consider that the Directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate;

• We have nothing material to add or draw attention to in relation to the Directors’

statement in Note 1 to the financial statements on the use of the going concern basis of

accounting, and their identification therein of a material uncertainty over the Group

and parent Company’s ability to continue to use that basis for the going concern

period; and

• The related statement under the Listing Rules set out on page 100 is materially consistent

with the financial statements and our audit knowledge.

Independent auditor’s report continued

to the members of Marston’s PLC

96 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

6 FRAUD AND BREACHES OF LAWS AND REGULATIONS –

ABILITYTODETECT

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (‘fraud risks’) we assessed events or

conditions that could indicate an incentive or pressure to commit fraud or provide an

opportunity to commit fraud. Our risk assessment procedures included:

• Enquiring of Directors, the Audit Committee, internal audit and inspection of policy

documentation as to the Group’s/parent Company’s high-level policies and procedures

to prevent and detect fraud, including the internal audit function, and the Group’s/

parent Company’s channel for ‘whistleblowing’, as well as whether they have

knowledge of any actual, suspected or alleged fraud.

• Reading Board, Audit Committee and Remuneration Committee minutes.

• Considering remuneration incentive schemes and performance targets.

• Using analytical procedures to identify any unusual or unexpected relationships.

• Considering the existence of any significant unusual transactions.

We communicated identified fraud risks throughout the audit team and remained alert

toany indications of fraud throughout the audit.

As required by auditing standards, we perform procedures to address the risk of

management override of controls, in particular the risk that Group and component

management may be in a position to make inappropriate accounting entries and the

riskof bias in accounting estimates and judgements such as the valuation of the effective

freehold land and buildings, valuation of derivatives and pension assumptions. On this

audit we do not believe there is a fraud risk related to revenue recognition because Group

revenue is generated mainly from retail through the operation of pubs. Retail revenue

contains no significant judgements, and is comprised of a large number of small, simple

transactions that are received in cash or credit card receivables at the point of sale.

Therefore, there is limited opportunity for management manipulation or to fraudulently post

the volume of transactions that would be required to have a material impact on revenue.

We did not identify any additional fraud risks.

In determining the audit procedures we took into account the results of our evaluation and

testing of the operating effectiveness and the design of some of the Group-wide fraud risk

management controls. Refer to page 70 of the Audit Committee report.

We performed procedures including:

• Identifying journal entries to test based on risk criteria and comparing the identified entries

to supporting documentation. These included journal entries made to unusual accounts

related to revenue, cash and loans and borrowings and those posted by privileged users.

Identifying and responding to risks of material misstatement due to

non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have

amaterial effect on the financial statements from our general commercial and sector

experience, and through discussion with the Directors and other management as required by

auditing standards. We also discussed with the Directors and other management the policies

and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations throughout our team and remained

alert to any indications of non-compliance throughout the audit.

The potential effect of these laws and regulations on the financial statements

variesconsiderably.

Firstly, the Group is subject to laws and regulations that directly affect the financial

statements including financial reporting legislation (including related companies legislation),

distributable profits, pensions legislation and taxation legislation, and we assessed the extent

of compliance with these laws and regulations as part of our procedures on the related

financial statement items.

Secondly, the Group is subject to many other laws and regulations where the consequences

of non-compliance could have a material effect on amounts or disclosures in the financial

statements, for instance through the imposition of fines or litigation or the loss of the Group’s

licence to operate.

We identified the following areas as those most likely to have such an effect: the Pubs Code,

health and safety, GDPR compliance, anti-bribery, employment law, Payment Card Industry

compliance, money laundering, environmental protection, consumer rights, misrepresentation,

market abuse legislation and certain aspects of company legislation recognising the nature

ofthe Group’s activities. Auditing standards limit the required audit procedures to identify

non-compliance with these laws and regulations to enquiry of the Directors and other

management and inspection of regulatory and legal correspondence, if any. Therefore if

abreach of operational regulations is not disclosed to us or evident from relevant

correspondence, an audit will not detect that breach.

Independent auditor’s report continued

to the members of Marston’s PLC

97Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

6 FRAUD AND BREACHES OF LAWS AND REGULATIONS –

ABILITYTODETECT CONTINUED

We discussed with the Audit Committee matters related to actual or suspected breaches of

laws or regulations, for which disclosure is not necessary, and considered any implications

for our audit.

Context of the ability of the audit to detect fraud or breaches

oflaworregulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not

have detected some material misstatements in the financial statements, even though we

have properly planned and performed our audit in accordance with auditing standards.

For example, the further removed non-compliance with laws and regulations is from the

events and transactions reflected in the financial statements, the less likely the inherently

limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of

internal controls. Our audit procedures are designed to detect material misstatement. We are

not responsible for preventing non-compliance or fraud and cannot be expected to detect

non-compliance with all laws and regulations.

7 WE HAVE NOTHING TO REPORT ON THE OTHER INFORMATION

INTHEANNUAL REPORT

The Directors are responsible for the other information presented in the Annual Report

together with the financial statements. Our opinion on the financial statements does not

cover the other information and, accordingly, we do not express an audit opinion or,

except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based

on our financial statements audit work, the information therein is materially misstated or

inconsistent with the financial statements or our audit knowledge. Based solely on that

workwe have not identified material misstatements in the other information.

Strategic report and Directors’ report

Based solely on our work on the other information:

• we have not identified material misstatements in the strategic report and the

directors’report;

• in our opinion the information given in those reports for the financial period is consistent

with the financial statements; and

• in our opinion those reports have been prepared in accordance with the Companies

Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration Report to be audited has been

properly prepared in accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and longer-term viability

We are required to perform procedures to identify whether there is a material inconsistency

between the Directors’ disclosures in respect of emerging and principal risks and the

viability statement, and the financial statements and our audit knowledge.

Based on those procedures, other than the material uncertainty related to going concern

referred to above, we have nothing further material to add or draw attention to in relation to:

• the Directors’ confirmation within the Viability Statement on page 53 that they have carried

out a robust assessment of the emerging and principal risks facing the Group, including

those that would threaten its business model, future performance, solvency and liquidity;

• the Principal Risks disclosures describing these risks and how emerging risks are

identified, and explaining how they are being managed and mitigated; and

• the Directors’ explanation in the Viability Statement of how they have assessed the

prospects of the Group, over what period they have done so and why they considered

that period to be appropriate, and their statement as to whether they have a reasonable

expectation that the Group will be able to continue in operation and meet its liabilities as

they fall due over the period of their assessment, including any related disclosures drawing

attention to any necessary qualifications or assumptions.

We are also required to review the Viability Statement set out on page 53 under the Listing

Rules. Based on the above procedures, we have concluded that the above disclosures are

materially consistent with the financial statements and our audit knowledge.

Our work is limited to assessing these matters in the context of only the knowledge acquired

during our financial statements audit. As we cannot predict all future events or conditions

and as subsequent events may result in outcomes that are inconsistent with judgements that

were reasonable at the time they were made, the absence of anything to report on these

statements is not a guarantee as to the Group’s and parent Company’s longer-term viability.

Independent auditor’s report continued

to the members of Marston’s PLC

98 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

7 WE HAVE NOTHING TO REPORT ON THE OTHER INFORMATION IN THE

ANNUAL REPORT CONTINUED

Corporate governance disclosures

We are required to perform procedures to identify whether there is a material inconsistency

between the Directors’ corporate governance disclosures and the financial statements

and our audit knowledge.

Based on those procedures, we have concluded that each of the following is materially

consistent with the financial statements and our audit knowledge:

• the Directors’ statement that they consider that the annual report and financial

statements 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;

• the section of the annual report describing the work of the Audit Committee, including

the significant issues that the Audit Committee considered in relation to the financial

statements, and how these issues were addressed; and

• the section of the annual report that describes the review of the effectiveness of the

Group’s risk management and internal control systems.

We are required to review the part of the Corporate Governance Statement relating to the

Group’s compliance with the provisions of the UK Corporate Governance Code specified

by the Listing Rules for our review. We have nothing to report in this respect.

8 WE HAVE NOTHING TO REPORT ON THE OTHER MATTERS ON WHICH WE

ARE REQUIRED TO REPORT BY EXCEPTION

Under the Companies Act 2006, we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent Company, or returns

adequate for our audit have not been received from branches not visited by us; or

• the parent Company financial statements and the part of the Directors’ Remuneration

Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

9 RESPECTIVE RESPONSIBILITIES

Directors’ responsibilities

As explained more fully in their statement set out on page 91, the Directors are responsible

for: the preparation of the financial statements including being satisfied that they give a

true and fair view; 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; assessing the Group and parent Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to going concern; and using 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.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as

a whole are free from material misstatement, whether due to fraud or error, and to issue our

opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not

guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of the financial statements. A fuller description

of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

The parent Company is required to include these financialstatements in an annual report

prepared under Disclosure Guidance and Transparency Rule (‘DTR’) 4.1.17R and 4.1.18R. This

auditor’s report provides no assurance overwhether the annual financial report has been

prepared in accordance with thoserequirements.

10 THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE

OURRESPONSIBILITIES

This report is made solely to the Company’s members, as a body, in accordance with

Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that

we might state to the Company’s members those matters we are required to state to them in

an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not

accept or assume responsibility to anyone other than the Company and the Company’s

members, as a body, for our audit work, for this report, or for the opinions we have formed.

John Leech

(Senior Statutory Auditor)

for and on behalf of KPMG LLP,

Statutory Auditor

Chartered Accountants

One Snowhill,

Snow Hill Queensway

Birmingham

B4 6GH

5 December 2023

Independent auditor’s report continued

to the members of Marston’s PLC

99Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

2023 2022

Note

Underlying

£m

Non-underlying

(note 4) £m

Total

£m

Underlying

£m

Non-underlying

(note 4) £m

Total

£m

Revenue 3 872.3 – 872.3 799.6 – 799.6

Net operating expenses 3 (747.5) (34.6) (782.1) (684.2) 26.7 (657.5)

Income from associates 12 9.9 – 9.9 3.3 – 3.3

Operating profit/(loss) 134.7 (34.6) 100.1 118.7 26.7 145.4

Finance costs 6 (100.4) – (100.4) (91.9) – (91.9)

Finance income 6 1.2 – 1.2 0.9 0.5 1.4

Interest rate swap movements 4, 6 – (21.6) (21.6) – 109.2 109.2

Contingent consideration fair value movement 4, 6 – – – – (0.7) (0.7)

Net finance (costs)/income 4, 6 (99.2) (21.6) (120.8) (91.0) 109.0 18.0

Profit/(loss) before taxation 35.5 (56.2) (20.7) 27.7 135.7 163.4

Taxation 4, 7 (3.5) 14.9 11.4 (0.2) (26.0) (26.2)

Profit/(loss) for the period attributable to equity shareholders 32.0 (41.3) (9.3) 27.5 109.7 137.2

The results for the current period reflect the 52 weeks ended 30 September 2023 and the results for the prior period reflect the 52 weeks ended 1 October 2022.

Earnings/(loss) per share: Note

2023

2022

Basic (loss)/earnings per share 9 (1.5) 21.7

Basic underlying earnings per share 9 5.1 4.3

Diluted (loss)/earnings per share 9 (1.5) 21.4

Diluted underlying earnings per share 9 5.1 4.3

1 Alternative performance measures (APMs) are defined and reconciled to a statutory equivalent in the additional information commencing on page 154.

Group income statement

For the 52 weeks ended 30 September 2023

100 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

2023

£m

2022

£m

(Loss)/profit for the period (9.3) 137.2

Items of other comprehensive income that may subsequently be reclassified to profit or loss

(Losses)/gains arising on cash flow hedges (3.0) 23.9

Transfers to the income statement on cash flow hedges 11.4 17.0

Other comprehensive income/(expense) of associates 0.8 (0.8)

Tax on items that may subsequently be reclassified to profit or loss (2.1) (10.2)

7.1 29.9

Items of other comprehensive income that will not be reclassified to profit or loss

Remeasurement of retirement benefits (9.2) 23.3

Unrealised surplus on revaluation of properties 95.6 105.8

Reversal of past revaluation surplus (93.9) (34.3)

Tax on items that will not be reclassified to profit or loss (0.2) (20.5)

(7.7) 74.3

Other comprehensive (expense)/income for the period (0.6) 104.2

Total comprehensive (expense)/income for the period attributable to equity shareholders (9.9) 241.4

The results for the current period reflect the 52 weeks ended 30 September 2023 and the results for the prior period reflect the 52 weeks ended 1 October 2022.

Group statement of comprehensive income

For the 52 weeks ended 30 September 2023

101Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Note

2023

£m

2022

£m

Operating activities

(Loss)/profit for the period (9.3) 137.2

Taxation (11.4) 26.2

Net finance costs/(income) 120.8 (18.0)

Depreciation and amortisation 45.5 44.2

Working capital movement 31 (29.0) (31.8)

Non-cash movements 31 12.3 (30.4)

Decrease in provisions and other non-current liabilities (0.8) (7.0)

Difference between defined benefit pension contributions paid and amounts charged (7.6) (7.3)

Dividends from associates 21.6 19.4

Income tax (paid)/received (0.9) 1.5

Net cash inflow from operating activities 141.2 134.0

Investing activities

Interest received 1.8 0.9

Sale of property, plant and equipment and assets held for sale 51.3 9.9

Purchase of property, plant and equipment and intangible assets (65.3) (70.1)

Disposal of subsidiary – 28.2

Finance lease capital repayments received 2.5 2.7

Net transfer (to)/from other cash deposits 30 (0.1) 0.2

Net cash outflow from investing activities (9.8) (28.2)

Financing activities

Interest paid (93.1) (79.4)

Arrangement costs of bank facilities (4.0) –

Repayment of securitised debt (39.4) (37.4)

Advance of bank borrowings 14.0 25.0

Net repayments of capital element of lease liabilities (5.1) (8.5)

Repayment of other borrowings (5.0) (10.0)

Net cash outflow from financing activities (132.6) (110.3)

Net decrease in cash and cash equivalents 30 (1.2) (4.5)

The cash flows for the current period reflect the 52 weeks ended 30 September 2023 and the cash flows for the prior period reflect the 52 weeks ended 1 October 2022.

Group cash flow statement

For the 52 weeks ended 30 September 2023

102 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Note

30 September

2023

£m

1 October

2022

£m

Non-current assets

Intangible assets 10 32.9 35.1

Property, plant, and equipment 11 2,064.8 2,111.0

Interests in associates 12 250.9 260.3

Other non-current assets 13 15.0 17.9

Deferred tax assets 14 0.9 –

Retirement benefit surplus 15 12.9 15.1

Derivative financial instruments 16 2.7 1.8

2,380.1 2,441.2

Current assets

Derivative financial instruments 16 1.1 3.3

Inventories 17 14.9 12.6

Trade and other receivables 18 26.9 30.1

Current tax assets 0.4 –

Other cash deposits 3.1 3.0

Cash and cash equivalents 26.5 27.7

72.9 76.7

Assets held for sale 19 1.4 4.8

74.3 81.5

Current liabilities

Borrowings 20 (65.9) (64.1)

Trade and other payables 22 (170.4) (204.4)

Current tax liabilities – (1.2)

Provisions for other liabilities and charges 23 (1.4) (1.0)

(237.7) (270.7)

Non-current liabilities

Borrowings 20 (1,529.5) (1,560.6)

Derivative financial instruments 16 (37.4) (25.5)

Other non-current liabilities 24 (7.1) (6.5)

Provisions for other liabilities and charges 23 (2.6) (3.3)

Deferred tax liabilities 14 – (8.0)

(1,576.6) (1,603.9)

Net assets 640.1 648.1

Group balance sheet

As at 30 September 2023

103Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Note

30 September

2023

£m

1 October

2022

£m

Shareholders’ equity

Equity share capital 28 48.7 48.7

Share premium account 334.0 334.0

Revaluation reserve 412.1 417.1

Capital redemption reserve 29 6.8 6.8

Hedging reserve (44.4) (50.7)

Own shares 29 (110.6) (110.9)

Retained earnings (6.5) 3.1

Total equity 640.1 648.1

The financial statements were approved by the Board and authorised for issue on 5 December 2023 and are signed on its behalf by:

Hayleigh Lupino

Chief Financial Officer

5 December 2023

Group balance sheet continued

As at 30 September 2023

104 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Equity share

capital

£m

Share premium

account

£m

Revaluation

reserve

£m

Capital redemption

reserve

£m

Hedging

reserve

£m

Own

£m

Retained

earnings

£m

Total

equity

£m

At 2 October 2022 48.7 334.0 417.1 6.8 (50.7) (110.9) 3.1 648.1

Loss for the period – – – – – – (9.3) (9.3)

Remeasurement of retirement benefits – – – – – – (9.2) (9.2)

Tax on remeasurement of retirement benefits – – – – – – 2.3 2.3

Losses on cash flow hedges – – – – (3.0) – – (3.0)

Transfers to the income statement on cash flow

hedges – – – – 11.4 – – 11.4

Tax on hedging reserve movements – – – – (2.1) – – (2.1)

Other comprehensive income of associates – – – – – – 0.8 0.8

Property revaluation – – 95.6 – – – – 95.6

Property impairment – – (93.9) – – – – (93.9)

Deferred tax on properties – – (2.5) – – – – (2.5)

Total comprehensive (expense)/income – – (0.8) – 6.3 – (15.4) (9.9)

Share-based payments – – – – – – 0.4 0.4

Sale of own shares – – – – – 0.3 (0.3) –

Transfer disposals to retained earnings – – (5.0) – – – 5.0 –

Transfer tax to retained earnings – – 0.8 – – – (0.8) –

Changes in equity of associates – – – – – – 1.5 1.5

Total transactions with owners – – (4.2) – – 0.3 5.8 1.9

At 30 September 2023 48.7 334.0 412.1 6.8 (44.4) (110.6) (6.5) 640.1

Group statement of changes in equity

For the 52 weeks ended 30 September 2023

105Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Equity share

capital

£m

Share premium

account

£m

Revaluation

reserve

£m

Capital redemption

reserve

£m

Hedging

reserve

£m

Own

£m

Retained

earnings

£m

Total

equity

£m

At 3 October 2021 48.7 334.0 360.5 6.8 (81.4) (111.1) (151.1) 406.4

Profit for the period – – – – – – 137.2 137.2

Remeasurement of retirement benefits – – – – – – 23.3 23.3

Tax on remeasurement of retirement benefits – – – – – – (5.8) (5.8)

Gains on cash flow hedges – – – – 23.9 – – 23.9

Transfers to the income statement on cash

flowhedges – – – – 17.0 – – 17.0

Tax on hedging reserve movements – – – – (10.2) – – (10.2)

Other comprehensive expense of associates – – – – – – (0.8) (0.8)

Property revaluation – – 105.8 – – – – 105.8

Property impairment – – (34.3) – – – – (34.3)

Deferred tax on properties – – (14.7) – – – – (14.7)

Total comprehensive income – – 56.8 – 30.7 – 153.9 241.4

Share-based payments – – – – – – 0.5 0.5

Sale of own shares – – – – – 0.2 (0.2) –

Transfer disposals to retained earnings – – (0.2) – – – 0.2 –

Changes in equity of associates – – – – – – (0.2) (0.2)

Total transactions with owners – – (0.2) – – 0.2 0.3 0.3

At 1 October 2022 48.7 334.0 417.1 6.8 (50.7) (110.9) 3.1 648.1

Further detail in respect of the Group’s equity is provided in notes 28 and 29.

Group statement of changes in equity continued

For the 52 weeks ended 1 October 2022

106 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES

The Group’s principal accounting policies are set out below:

Basis of preparation

These consolidated financial statements for the 52 weeks ended 30 September 2023 (2022:

52wee52 weeks ended 1 October 2022) have been prepared in accordance with International

Financial Reporting Standards (IFRS) as adopted within the UK and in accordance with the

requirements of the Companies Act 2006. The financial statements have been prepared

under the historical cost convention as modified by the revaluation of certain items,

principally effective freehold land and buildings, certain financial instruments, retirement

benefits and share-based payments, as explained below.

New standards

The Group has adopted the following new or revised standards in the current period:

IFRS 3 Business Combinations

Reference to the Conceptual Framework

IAS 16 Property, Plant and Equipment

Amendments prohibiting an entity from deducting from the cost of property, plant

and equipment amounts received from selling items produced while the entity is

preparing the asset for its intended use

IAS 37 Provisions, Contingent Liabilities and Contingent Assets

Amendments regarding the costs to include when assessing whether a contract

isis onerous

The Group has adopted the amendments to IAS 12 ‘Income Taxes’ (International Tax Reform– m –

Pillar Two Model Rules) during the current period which introduces a temporary mandatory

exception to the accounting for deferred taxes arising from the implementation of the

PillarTwo modr Two model rules. The temporary mandatory exception is applicable immediately

andretrod retrospectively, and requires further disclosure during the financial period ending

28S28 September 2024.

There is no material impact of these new or revised standards on the consolidated financial

statements for the 52 weeks ended 30 September 2023.

The International Accounting Standards Board (IASB) have issued the following new or revised

standards with an effective date for financial periods beginning on or after the dates disclosed

below. These standards have not yet been adopted by the Group. The IASB have also issued a

number of minor amendments to standards as part of their Annual Improvements to IFRS.

Notes

For the 52 weeks ended 30 September 2023

IFRS 7 Financial Instruments: Disclosures

Supplier finance arrangements

1 January 2024

IFRS 10 Consolidated Financial Statements

Amendments regarding the sale or contribution of assets

between an investor and its associate or joint venture

Date deferred

IFRS 16 Leases

Amendments regarding seller-lessor subsequent measurement in

a sale and leaseback transaction

1 January 2024

IFRS 17 Insurance Contracts

New accounting standard

1 January 2023

IAS 1 Presentation of Financial Statements

Amendments regarding the disclosure of accounting policies

Amendments regarding the classification of liabilities

Amendments regarding the classification of debt with covenants

1 January 2023

1 January 2024

IAS 7 Statement of Cash Flows

Supplier finance arrangements

1 January 2024

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Amendments regarding the definition of accounting estimates

1 January 2023

IAS 12 Income Taxes

Amendments regarding deferred tax on leases and

decommissioning obligations

1 January 2023

IAS 28 Investments in Associates and Joint Ventures

Amendments regarding the sale or contribution of assets

between an investor and its associate or joint venture

Date deferred

It is not anticipated that any of the above unadopted new standards will have a material

impact on the Group’s results or financial position.

107Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

Going concern

The cost-of-living crisis and inflationary pressures has led to lower underlying1 profit and

operating cashflows than would otherwise have resulted had these macroeconomic

conditions not existed.

The Group’s sources of funding include its securitised debt, a £300.0 million bank facility

available until January 2025 (of which £229.0 million was drawn at 30 September 2023),

a£a £40.0 million private placement in place until January 2025, and a £5.0 million seasonal

overdraft facility which extends to £20.0 million from 25 January to 6 May and 1 July to

12Aug2 August each year (of which £nil was drawn at 30 September 2023).

There are two covenants associated with the Group’s securitised debt – free cash flow to

debt service coverage ratio (FCF DSCR) and Net Worth. The FCF DSCR is a measure of free

cash flow to debt service for the group headed by Marston’s Pubs Parent Limited and is

required to be a minimum of 1.1 over both a two-quarter and four-quarter period, and the

Net Worth is derived from the net assets of that group of companies.

There are three covenants associated with the Group’s bank and private placement

borrowings for the non-securitised group of companies – Debt Cover, Interest Cover and

Liquidity. The Debt Cover covenant is a measure of net borrowings to EBITDA which is a

maximum of 4.5 times from 30 September 2023, reducing to 4.0 times from 29 June 2024.

TheIntee Interest Cover covenant is a measure of EBITDA to finance charges, which is a minimum

of1of 1.5 times from 30 September 2023, rising on a stepped basis to 1.75 times from 30 December

2023 and 2.0 times from 29 June 2024. The Liquidity covenant is a measure of headroom on

theGroe Group’s bank and private placement borrowings, which is a minimum of £35.0 million on

the last day of each fiscal month from 30 September 2023, increasing to £45.0 million from

27J27 July 2024.

The Directors have performed an assessment of going concern over the period of 12 months

from the date of signing these financial statements, to assess the adequacy of the Group’s

financial resources. In performing their assessment, the Directors considered the Group’s

financial position and exposure to principal risks, including the cost-of-living crisis and

inflationary pressure. The Group’s base case forecast assumes moderate sales price increases

and operational costs (that have not already been secured) rising broadly in line with

inflation. On the Group’s base case forecast, no covenants are forecast to be breached

within the next 12 months and the Group has adequate liquidity throughout the going

concern period.

The Directors have also considered a severe but plausible downside scenario, incorporating

a 5% reduction in sales volume as a consequence of the cost-of-living crisis and current

inflationary pressures along with a reasonably plausible increase in costs compared to the

base case forecast. The conclusion of this assessment was that the Directors are satisfied

thatthat the Group has adequate liquidity to withstand such a severe but plausible downside

scenario. However, in this severe but plausible downside scenario only, even after factoring in

mitigations under the control of management such as reductions in discretionary spend, the

Group would be required to obtain covenant amendments in respect of its Interest Cover

covenant associated with the Group’s bank and private placement borrowings in the outer

quarters of the going concern period. In such a severe but plausible downside, the Group

has a number of options. The Group would be very confident in leveraging the supportive

relationship it has with its lenders and renegotiate the terms of its financing in advance of any

covenant amendment being required or the Group would seek covenant amendments.

Whilst there is no certainty since it requires the agreement of its lenders, based on covenant

amendments previously secured, the successful amend and extend to the RCF and private

placement during the period and the continued positive relationships, the Directors believe

they will be able to secure any such amendments required.

Considering the above, the Directors are satisfied that the Group and the Company have

adequate resources to continue in operational existence for the foreseeable future, being

atlat least 12 months from the date of signing these financial statements. For this reason, the

Directors continue to adopt the going concern basis of accounting in preparing these

financial statements. However, a material uncertainty exists as a result of the potential

requirement to obtain covenant amendments in the severe but plausible downside scenario,

which may cast significant doubt on the Group’s and the Company’s ability to continue as a

going concern and, therefore, to continue realising their assets and discharging their

liabilities in the normal course of business. The financial statements do not include any

adjustments that would result from the basis of preparation being inappropriate.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of Marston’s PLC

and all of its subsidiary undertakings. The results of subsidiary undertakings are included in the

Group accounts from the date on which control transferred to the Group or, in the case of

disposals, up to the date when control ceased. The Group controls an entity when it is exposed

to, or has rights to, variable returns from its involvement with the entity and has the ability to

affect those returns through its power over the entity. In assessing control, the Group takes into

consideration potential voting rights. Transactions between Group companies are eliminated

on consolidation.

Notes continued

For the 52 weeks ended 30 September 2023

108 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

The Group has applied the purchase method in accounting for the acquisition of subsidiaries.

The cost of an acquisition is measured as the fair value of the consideration paid and

deferred. Identifiable assets acquired and liabilities assumed in a business combination are

measured initially at their fair values at the acquisition date. Acquisition costs are expensed

as incurred. The excess of the cost of acquisition over the fair value of the Group’s share of

the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less

than the fair value of the Group’s share of the identifiable net assets of the subsidiary

acquired, the difference is recognised immediately in the income statement.

When the Group loses control of a subsidiary the carrying amounts of the assets and liabilities

of that subsidiary are derecognised at the date when control is lost. The fair value of the

consideration received is recognised alongside any investment retained in the former

subsidiary at the date that control is lost. Any resulting difference is recognised in full as

agaa gainor ln or loss under IFRS 10 ‘Consolidated Financial Statements’.

The consolidated financial statements incorporate the results of Marston’s Issuer PLC and its

parent company, Marston’s Issuer Parent Limited. Marston’s Issuer PLC was set up with the sole

purpose of issuing debt secured on assets owned by the Group. Wilmington Trust SP Services

(London) Limited holds the shares of Marston’s Issuer Parent Limited under a declaration of

trust for charitable purposes. The rights provided to the Group through the securitisation

givethive the Group power over these companies and the ability to use that power to affect its

exposure to variable returns from them. As such the Directors of Marston’s PLC consider

thatthat these companies are controlled by the Group, as defined in IFRS 10, and hence for

thepue purpose of the consolidated financial statements they have been treated as

subsidiaryy undertakings.

The Group’s interests in associates are accounted for using the equity method. On initial

recognition the investment in an associate is recognised at cost and the carrying amount is

subsequently increased or decreased to recognise the Group’s share of the profit or loss,

other comprehensive income and changes in equity of the associate after the date of

acquisition. The net investment in an associate is impaired and impairment losses are

incurred if, and only if, there is objective evidence of impairment as a result of events that

occurred after the initial recognition of the net investment which have an impact on the

estimated future cash flows that can be reliably estimated.

Revenue and other operating income

The Group’s revenue from contracts with customers comprises outlet sales and wholesale sales.

Outlet sales

The Group sells food and drink to customers in its pubs. Revenue from the sale of food and

drink is recognised when the goods are sold to the customers in the pubs. Payment of the

transaction price is due immediately when the goods are provided to the customer.

The Group provides accommodation to customers in its pubs and lodges. Revenue from the

provision of accommodation is recognised over the period of the customer’s stay. Payment

of the transaction price is due at the time of the customer’s stay.

The Group provides gaming machines for customers to play in its pubs. Revenue from gaming

machines is recognised when the game has been played. Payment of the transaction price

is due when the game is played.

In respect of its franchised arrangements, where the Group controls the above goods or

services before those goods or services are transferred to the customer, the associated

income is included within the Group’s revenue. The Group recognises revenue in respect

ofitof itsfras franchised arrangements as a principal rather than an agent because the Group has

discretion in establishing prices for the above goods or services with the supplier and controls

the goods prior to transfer to the customer.

Wholesale sales

The Group sells drinks to tenants of its licensed properties. Revenue is recognised when the

Group has transferred control of the goods to the customer. This occurs when the goods have

been delivered to the customer, the customer has obtained legal title to the goods, the Group

cannot require the return or transfer of the goods and the customer has an unconditional

obligation to pay for the goods.

The Group has discretion in establishing the price of goods delivered to the customer and the

Group is responsible for fulfilling the promise to provide the specified goods.

A receivable is recognised when the goods are delivered, and payment is due in line with

each customer’s individual credit terms. These terms are all less than one year and as such no

element of financing is considered to be present.

Rental income

The Group also includes rent receivable from tenants of its licensed properties within revenue.

This income is recognised in the period to which it relates.

Notes continued

For the 52 weeks ended 30 September 2023

109Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

Operating segments

The Group is considered to have one operating segment under IFRS 8 ‘Operating Segments’

and therefore no disclosures are presented. This is in line with the reporting to the chief

operating decision maker and the operational structure of the business. The measure of profit

or loss reviewed by the chief operating decision maker is underlying1 profit/loss before tax.

Non-underlying

items

In order to illustrate the underlying1 performance of the Group, presentation has been made

ofpeof performance measures excluding those items which it is considered would distort the

comparability of the Group’s results. Non-underlying

items are defined as those items of

income and expense which, because of the materiality, nature and/or expected infrequency

of the events giving rise to them, merit separate presentation to enable users of the financial

statements to better understand elements of financial performance in the period, so as to

facilitate comparison with future and prior periods. As management of the freehold and

leasehold property estate is an essential and significant area of the business, the threshold for

classification of property related items as non-underlying

is higher than other items.

Details in respect of non-underlying

items recognised in the current and prior period are

provided in note 4. Material judgements in respect of the classification of non-underlying

items in the current period related to the impairment of freehold and leasehold properties

and the interest rate swap movements. The impairment of freehold and leasehold properties

and the interest rate swap movements were considered to be non-underlying

as they were

significant items that resulted primarily from movements in external market variables rather

than reflecting the underlying1 trading performance of the Group.

Intangible assets

Intangible assets are carried at cost less accumulated amortisation and any impairment

losses. Intangible assets arising on an acquisition are recognised separately from goodwill if

the fair value of these assets can be identified separately and measured reliably.

Amortisation is calculated on a straight-line basis over the estimated useful life of the

intangible asset. Where the useful life of the asset is considered to be indefinite no annual

amortisation is provided but the asset is subject to annual impairment reviews. Impairment

reviews are carried out more frequently if events or changes in circumstances indicate that

the carrying value of an asset may be impaired. Any impairment of carrying value is

charged to the income statement. The useful lives of the Group’s intangible assets are:

Computer software 5 to 20 years

Property, plant, and equipment

• Land and buildings which are either freehold or are in substance freehold assets are

classed as effective freehold land and buildings. This includes leasehold land and

buildings with a term exceeding 100 years at acquisition/commencement of the lease

orwhr where there is an option to purchase the freehold at the end of the lease term for a

nominal amount. All other leasehold land and buildings are classed as leasehold land

and buildings.

• Effective freehold land and buildings are initially stated at cost and subsequently at

valuation. Leasehold land and buildings and fixtures, fittings, tools and equipment are

stated at cost.

• Depreciation is charged to the income statement on a straight-line basis to provide for

the cost or valuation of the assets less their residual values over their useful lives.

• Land and buildings are depreciated to their residual values over the lower of the lease

term (where applicable) and 50 years.

• Fixtures, fittings, tools and equipment are depreciated over periods ranging from

3to13 to 15yea5 years.

• Own labour and interest costs directly attributable to capital projects are capitalised.

Residual values and useful lives are reviewed and adjusted if appropriate at each balance

sheet date. The Group’s effective freehold land and buildings in respect of its pub estate are

considered to have a residual value equal to their current valuation and as such no

depreciation is charged on these assets.

Effective freehold land and buildings are revalued by qualified valuers on an annual basis

using open market values so that the carrying value of an asset does not differ significantly

from its fair value at the balance sheet date. The annual valuations are determined via

third-party inspection of approximately a third of the sites such that all sites are individually

inspected every three years. Substantially all of the Group’s effective freehold land and

buildings have been valued by a third-party in accordance with the Royal Institution of

Chartered Surveyors’ Red Book. These valuations are performed directly by reference to

observable prices in an active market or recent market transactions on arm’s length terms.

Internal valuations are performed on the same basis.

For effective freehold land and buildings, revaluation losses are charged to the revaluation

reserve to the extent that a previous gain has been recorded for that asset, and thereafter

tothto the income statement. Surpluses on revaluation are recognised in the revaluation reserve,

except to the extent that they reverse previously charged impairment losses for that asset,

inwin which case the reversal is recorded in the income statement.

Notes continued

For the 52 weeks ended 30 September 2023

110 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

The effective freehold property estate is assessed at each reporting date to ensure that the

carrying amount does not differ materially from that which would be determined using fair

value at the end of the reporting period. This is consistent with the requirements of IAS 16

‘Property, Plant and Equipment’.

Disposals of property, plant and equipment

Profit/loss on disposal of property, plant and equipment represents net sale proceeds less the

carrying value of the assets and any associated lease liabilities. Any element of the revaluation

reserve relating to the property disposed of is transferred to retained earnings at the date

ofsaof sale.

Impairment

If there are indications of impairment or reversal of impairment, an assessment is made of

therecoverae recoverable amount of each significant cash generating unit; these are considered to be

each individual trading sites. If there are indications of impairment or reversal of impairment as

a result of a gap between the Group’s market capitalisation and asset values, an assessment is

made of the recoverable amount of the Group as a single cash generating unit; this includes

the Group’s effective freehold land and buildings and leasehold land and buildings. An

impairment loss is recognised where the recoverable amount is lower than the carrying value

of assets, including goodwill. The recoverable amount is the higher of value in use and fair

value less costs to sell. The impairment loss is recognised in the income statement unless the

asset is carried at a revalued amount, in which case the impairment loss is charged to the

revaluation reserve to the extent that a previous gain has been recorded, and thereafter

tothto theine income statement.

Where there is an indication that any previously recognised impairment losses no longer exist

or have decreased, a reversal of the loss is made if there has been a change in the estimates

used to determine the recoverable amounts since the last impairment loss was recognised.

The carrying amount of the asset is increased to its recoverable amount only up to the

carrying amount that would have resulted, net of depreciation or amortisation, had no

impairment loss been recognised for the asset in prior periods. The reversal is recognised in

the income statement unless the asset is carried at a revalued amount. The reversal of an

impairment loss on a revalued asset is recognised in other comprehensive income and

increases the revaluation surplus for that asset. However, to the extent that an impairment loss

on the same revalued asset was previously recognised in the income statement, the reversal

of that impairment loss is recognised in the income statement. The depreciation charge is

adjusted in future periods to allocate the asset’s revised carrying value, less any residual

value, on a systematic basis over its remaining useful life. There is no reversal of impairment

losses relating to goodwill.

Leases

At the inception of a contract the Group assesses whether that contract is, or contains,

alea lease. This is the case if the contract conveys the right to control the use of an identified

asset for a period of time in exchange for consideration. The Group has taken the practical

expedient in paragraph C3 of IFRS 16 ‘Leases’ not to reassess whether an existing contract is

or contains a lease at the date of initial application and as such the IFRS 16 definition of a

lease has only been applied to contracts which were entered into or amended on or after

29S29 September 2019.

The lease term is determined as the non-cancellable period of a lease together with periods

covered by an option to extend the lease if the Group is reasonably certain to exercise that

option and the periods covered by an option to terminate the lease if the Group is

reasonably certain not to exercise that option.

The Group has elected not to apply the lessee requirements of IFRS 16 to short-term leases

and leases for which the underlying asset is of low value. The lease payments for such leases

are recognised as an expense on a straight-line basis over the lease term. For all other leases

where it is the lessee the Group recognises a lease liability and a right-of-use asset at the

commencement date of the lease.

The lease liability is recognised as the present value of the lease payments discounted using

either the interest rate implicit in the lease or, where that rate cannot be readily determined,

the Group’s incremental borrowing rate. The lease payments include variable payments that

depend on an index or rate and the exercise price of a purchase option if it is reasonably

certain that it will be exercised. The lease liability is subsequently increased to reflect the

interest thereon, reduced by the lease payments made and remeasured to reflect any

reassessments or lease modifications, such as a change in future lease payments resulting

from a change in an index or rate or a change in the lease term.

The right-of-use asset is recognised at an amount equal to the total of the lease liability, any

lease payments made at or before the commencement date, any initial direct costs and the

estimated future dismantling, removal, and site restoration costs. The Group has elected to

apply the revaluation model to right-of-use assets relating to the effective freehold land and

buildings class of property, plant, and equipment. All other right-of-use assets are held under

the cost model and subsequently measured at cost less any accumulated depreciation and

impairment losses and adjusted for any remeasurement of the lease liability.

Notes continued

For the 52 weeks ended 30 September 2023

111Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

For assets where the Group is the lessor, leases are classified as finance leases if the terms of

the lease transfer substantially all the risks and rewards of ownership to the lessee. All other

leases are classified as operating leases. Where the Group is an intermediate lessor of an

asset, the sublease is classified as a finance lease or an operating lease by reference to the

right-of-use asset arising from the head lease rather than the underlying asset.

Income receivable under operating leases is credited to the income statement on a straight-

line basis over the term of the lease.

Where a sublease is classified as a finance lease the right-of-use asset is derecognised and

the Group recognises a finance lease receivable at an amount equal to the net investment

in the lease. The lease payments are discounted at the interest rate implicit in the lease, or

where this cannot be readily determined, the discount rate used for the head lease. Finance

income is recognised over the lease term based on a pattern reflecting a constant periodic

rate of return on the net investment in the lease.

Obligations arising from sale and leaseback arrangements with repurchase options that do

not fall within the scope of IFRS 16 are classified as other lease related borrowings and

accounted for in accordance with IFRS 9 ‘Financial Instruments’.

Inventories

Inventories are stated at the lower of cost and net realisable value and are valued on a ‘first

in, first out’ basis.

Assets held for sale

Assets, typically properties and related fixtures and fittings, are categorised as held for sale

when their value will be recovered through a sale transaction rather than continuing use.

Thisconds condition is met when the sale is highly probable, the asset is available for immediate

sale in its present condition and is being actively marketed. In addition, the Group must be

committed to the sale and completion should be expected to occur within one year from

the date of classification. Assets held for sale are valued at the lower of carrying value and

fair value less costs to sell. Once classified as held for sale, intangible assets and property,

plant and equipment are no longer amortised or depreciated.

Financial instruments

The Group classifies its financial assets in one of the following two categories: at fair value

through profit or loss and at amortised cost. The Group classifies its financial liabilities in one

ofthof the following two categories: at fair value through profit or loss and other financial liabilities.

The Group classifies a financial asset as at amortised cost if it has not been designated as at

fair value through profit or loss, the asset is held within a business model whose objective is to

hold financial assets in order to collect contractual cash flows and the contractual terms of

the asset give rise on specified dates to cash flows that are solely payments of principal

andinted interest.

Financial instruments at fair value through profit or loss

Derivatives are categorised as financial instruments at fair value through profit or loss unless

they are designated as part of a hedging relationship. The Group holds no other financial

instruments at fair value through profit or loss.

Financial assets at amortised cost

Financial assets at amortised cost comprise finance lease receivables, trade receivables,

other receivables, other cash deposits and cash and cash equivalents in the balance sheet

and are measured using the effective interest method.

Other financial liabilities

Non-derivative financial liabilities are classified as other financial liabilities. The Group’s other

financial liabilities comprise borrowings, trade payables and other payables. Other financial

liabilities are carried at amortised cost using the effective interest method.

Financial assets are derecognised when the rights to receive cash flows from the investments

have expired or have been transferred and the Group has transferred substantially all risks

and rewards of ownership.

It is, and has been throughout the period under review, the Group’s policy that no trading in

financial instruments shall be undertaken.

Notes continued

For the 52 weeks ended 30 September 2023

112 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

Derivative financial instruments

The only derivative financial instruments that the Group enters into are interest rate swaps.

The purpose of these transactions is to manage the interest rate risk arising from the Group’s

operations and its sources of finance.

Derivatives are initially recognised at fair value on the date the derivative contract is entered

into and are subsequently remeasured at their fair value at each balance sheet date. The

method of recognising the resulting gain or loss depends on whether the derivative is

designated as a hedging instrument.

The effective portion of changes in the fair value of derivatives that are designated and

qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss

relating to the ineffective portion is recognised immediately in the income statement.

Gains or losses arising from changes in the fair value of derivatives which are not designated

as part of a hedging relationship are presented in the income statement in the period in

which they arise.

At the inception of a hedging transaction, the Group documents the economic relationship

between hedging instruments and hedged items, as well as its risk management objectives

and strategy for undertaking the hedging transaction. The Group also documents its

assessment, both at hedge inception and on an ongoing basis, of whether the derivatives

that are used in hedging transactions are highly effective in offsetting changes in cash flows

of hedged items.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria

forhfor hedge accounting, any cumulative gain or loss existing in equity at that time remains in

equity and is recognised when the forecast transaction is ultimately recognised in the income

statement. When a forecast transaction is no longer expected to occur, the cumulative gain

orlosr loss that was reported in equity is immediately transferred to the income statement.

Amounts that have been recognised in other comprehensive income in respect of cash flow

hedges are reclassified from equity to profit or loss as a reclassification adjustment in the

same period or periods during which the hedged forecast cash flow affects profit or loss.

Finance lease receivables

Finance lease receivables are recognised at an amount equal to the net investment in the

lease and subsequently measured at amortised cost less provision for impairment.

Trade receivables and other receivables

Trade receivables and other receivables are recognised initially at fair value and

subsequently measured at amortised cost less provision for impairment.

The Group applies the expected credit loss model to calculate any loss allowance for

finance lease receivables, trade receivables and other receivables. For finance lease

receivables, trade receivables and other receivables that result from transactions that are

within the scope of IFRS 15 ‘Revenue from Contracts with Customers’ or from transactions

thataat are within the scope of IFRS 16 ‘Leases’ the loss allowance is measured as the lifetime

expected credit loss. As no trade or other receivables contain a significant financing

component, for the remaining trade or other receivables the loss allowance is measured as

the 12-month expected credit loss unless the credit risk has increased significantly since

initialrecogl recognition, in which case the lifetime expected credit losses is used. Details of the

methodologies used to calculate the expected credit loss for the different groupings of

finance lease receivables, trade receivables and other receivables are given in note 25.

The carrying amount of finance lease receivables, trade receivables and other receivables

isreis reduced through the use of an allowance account, and the amount of the loss allowance

is recognised in the income statement within other operating charges. The Group’s policy is

to write off finance lease receivables, trade receivables and other receivables when there

isnis no reasonable expectation of recovery of the balance due. Indicators that there is no

reasonable expectation of recovery depend on the type of debtor/customer and include

adea debt being over four months old, the failure of the debtor to engage in a repayment plan

and the failure to recover any amounts through enforcement activity. Subsequent recoveries

of amounts previously written off are credited against other operating charges in the

incomestatee statement.

Notes continued

For the 52 weeks ended 30 September 2023

113Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

Other cash deposits

Cash held on deposit with banks with a maturity of more than three months at the date

ofacof acquisition is classified within other cash deposits.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits on call with banks. Any bank

overdrafts are shown within borrowings in current liabilities. For the purpose of the cash flow

statement, cash and cash equivalents are as defined above, net of outstanding bank

overdrafts.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings

are subsequently stated at amortised cost; any difference between the proceeds (net of

transaction costs) and the redemption value is recognised in the income statement over the

period of the borrowings using the effective interest method.

If the basis for determining the contractual cash flows of borrowings measured at amortised

cost changes as a result of interest rate benchmark reform, then the effective interest rate of

the borrowings is updated to reflect the change that is required by the reform. A change in

the basis for determining the contractual cash flows is required by interest rate benchmark

reform when the change is necessary as a direct consequence of the reform and the new

basis for determining the contractual cash flows is economically equivalent to the

previousbus basis.

Preference shares are non-redeemable and are classified as liabilities. The dividends on

these preference shares are recognised in the income statement as finance costs.

Borrowing costs are recognised as an expense in the period in which they are incurred,

except for interest costs incurred on the financing of major projects, which are capitalised

until the time that the projects are available for use.

Trade payables and other payables

Trade payables and other payables are recognised initially at fair value and subsequently

measured at amortised cost using the effective interest method.

Employee benefits

Pension costs for the Group’s defined benefit pension plan are determined by the Projected

Unit Credit Method, with actuarial calculations being carried out at each period end date.

Costs are recognised in the income statement within net operating expenses and net finance

costs/income. The current service cost, past service cost and gains or losses arising from

settlements are included within net operating expenses. The net interest on the net defined

benefit asset/liability is included within finance income or costs and the administrative

expenses paid from plan assets are included within finance costs.

Actuarial gains or losses arising from experience adjustments and changes in actuarial

assumptions are recognised in full in the period in which they occur in the statement

ofcoof comprehensive income. The return on plan assets, excluding amounts included in

thenetie net interest on the net defined benefit asset/liability, is also recognised in other

comprehensive income.

The asset/liability recognised in the balance sheet for the defined benefit pension plan is the

fair value of plan assets less the present value of the defined benefit obligation. Where the fair

value of plan assets exceeds the present value of the defined benefit obligation, the Group

recognises an asset at the lower of the fair value of plan assets less the present value of the

defined benefit obligation, and the present value of any economic benefits available in the

form of refunds from the plan or reductions in future contributions to the plan. The Scheme

Rules provide the Group with an unconditional right to a refund of a surplus once the last

benefit has been paid to the last scheme member. Based on these rights, any net surplus is

recognised in full.

Should contributions payable under a minimum funding requirement not be available as a

refund or reduction in future contributions after they are paid into the plan, a liability would

be recognised to this extent when the obligation arose.

Pension costs for the Group’s defined contribution pension plans are charged to the income

statement in the period in which they arise.

Post-retirement medical benefits are accounted for in an identical way to the Group’s

defined benefit pension plan.

Notes continued

For the 52 weeks ended 30 September 2023

114 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

Key management personnel

Key management personnel are those who have authority and responsibility for planning,

directing, and controlling the activities of the Group. In the case of Marston’s PLC, the key

management personnel are the Directors of the Group and as such the Directors are related

parties of the Group.

Current and deferred tax

The current tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the balance sheet date and is measured at the amount expected to be paid to,

or recovered from, the tax authorities.

Deferred tax is provided in full, using the liability method, on all differences that have

originated but not reversed by the balance sheet date, and which give rise to an obligation

to pay more or less tax in the future. Differences are defined as the differences between the

carrying value of assets and liabilities and their tax base.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit

will be available against which the assets can be utilised.

Deferred tax is calculated using tax rates that are expected to apply when the related

deferred tax asset is realised, or the deferred tax liability is settled.

Provisions

Provisions are recognised in the balance sheet when the Group has a present legal or

constructive obligation as a result of a past event and it is probable that an outflow of

economic benefits will be required to settle the obligation.

These provisions are measured at the present value of the expenditure expected to be

required to settle the obligation using a pre-tax rate that reflects current market assessments

of the time value of money and the risks specific to the obligation for which the estimates of

future cash flows have not been adjusted.

Share-based payments

The fair value of share-based remuneration at the date of grant is calculated using the

Black-Scholes option-pricing model and charged to the income statement on a straight-line

basis over the vesting period of the award. The charge to the income statement takes

account of the estimated number of shares that will vest.

Non-vesting conditions are considered when determining the fair value of the Group’s

share-based payments, and all cancellations of share-based payments, whether by the

Group or by employees, are accounted for in an identical manner with any costs

unrecognised at the date of cancellation being immediately accelerated.

Own shares

Own shares comprise treasury shares, and shares held on trust for employee share schemes,

which are used for the issuing of shares to applicable employees. Own shares are recognised

at cost as a deduction from shareholders’ equity. Subsequent consideration received for the

sale of such shares is also recognised in equity, with any difference between the sale proceeds

and the original cost being taken to equity. No income or expense is recognised in the

performance statements on own share transactions.

Dividends

Dividends proposed by the Board but unpaid at the period end are recognised in the

financial statements when they have been approved by the shareholders. Interim dividends

are recognised when paid.

Transactions and balance sheet items in a foreign currency

Transactions in a foreign currency are translated to sterling using the exchange rate at the

dateodate of the transaction. Monetary receivables and payables are remeasured at closing

dayrates at ey rates at each balance sheet date. Exchange gains or losses that arise from such

remeasurement and on settlement of the transaction are recognised in the income statement.

Translation differences for non-monetary assets valued at fair value through profit or loss are

reported as part of the fair value gain or loss. Gains or losses on disposal of non-monetary

assets are recognised in the income statement.

Government grants

Government grants are recognised when there is reasonable assurance the grants will be

received, and the conditions of the grant will be complied with. Income from government

grants is included within other operating income.

Key estimates and significant judgements

Under IFRS the Group is required to make estimates and assumptions that affect the

application of policies and reported amounts. Estimates and judgements are continually

evaluated and are based on historical experience and other factors including expectations

of future events that are believed to be reasonable under the circumstances. Actual results

may differ from these estimates. Further details are provided in the relevant accounting

policy or detailed note to the financial statements.

Notes continued

For the 52 weeks ended 30 September 2023

115Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

The following are the critical judgements, apart from those involving estimates (which are

dealt with separately below), that the Directors have made in the process of applying the

Group’s accounting policies and that have had the most significant effect on the amounts

recognised in the financial statements:

Non-underlying

items

• Determination of items to be classified as non-underlying

(see accounting policy).

The following estimates and assumptions have a significant risk of causing a material

adjustment to the carrying amount of assets and liabilities:

Property, plant, and equipment

• Valuation of effective freehold land and buildings (note 11).

Retirement benefits

• Actuarial assumptions in respect of the defined benefit pension plan, which include

discount rates, rates of increase in pensions, inflation rates and life expectancies (note 15).

Financial instruments

• Valuation of derivative financial instruments (note 25).

Interests in associates

• Recoverable amount of the investment in Carlsberg Marston’s Limited estimated on a

value in use bases (note 12).

2 SEGMENT REPORTING

The Group is considered to have one operating segment under IFRS 8 ‘Operating Segments’

and therefore no disclosures are presented. This is in line with the reporting to the chief

operating decision maker and the operational structure of the business. The measure of profit

or loss reviewed by the chief operating decision maker is underlying1 profit/(loss) before tax.

Geographical areas

All of the Group’s revenue is generated in the UK. All of the Group’s assets are located in the UK.

3 REVENUE AND NET OPERATING EXPENSES

Revenue

2023

£m

2022

£m

Outlet sales 832.8 757.2

Wholesale sales 30.2 31.6

Revenue from contracts with customers 863.0 788.8

Rental income 9.3 10.8

Total revenue 872.3 799.6

2023 2022

Net operating expenses £m £m

Change in stocks of finished goods (1.8) 0.9

Own work capitalised (0.4) (0.8)

Other operating income (13.1) (9.6)

Raw materials and consumables 225.7 205.9

Depreciation of property, plant, and equipment 40.5 39.8

Amortisation of intangible assets 5.0 4.4

Employee costs 213.1 214.0

Impairment/(impairment reversal) of freehold and leasehold properties 30.9 (21.9)

Other operating charges 282.2 224.8

Net operating expenses 782.1 657.5

Government grants of £nil (2022: £1.3 million) in respect of COVID-19 assistance from local

authorities are included within other operating income. Other operating charges primarily

relate to pub overheads and administration costs.

The amounts included in the line items above which have been classified as non-underlying

are as follows:

2023

£m

2022

£m

Employee costs 2.5 –

Impairment/(impairment reversal) of freehold and leasehold properties 30.9 (21.9)

Other operating charges/(income) 1.2 (4.8)

34.6 (26.7)

Notes continued

For the 52 weeks ended 30 September 2023

116 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

3 REVENUE AND NET OPERATING EXPENSES CONTINUED

Fees payable to the Company’s Auditor were as follows:

KPMG LLP fees:

2023

£m

2022

£m

Fees payable to the Company’s Auditor for the audit of the Company’s

annual accounts 0.4 0.3

Fees payable to the Company’s Auditor for other services to the Group:

The audit of the Company’s subsidiaries 0.3 0.3

Audit related assurance services 0.1 0.1

0.8 0.7

4 NON-UNDERLYING

ITEMS

2023

£m

2022

£m

Non-underlying

operating items

Impairment/(impairment reversal) of freehold and leasehold properties 31.2 (21.6)

Special discretionary pension increase 0.5 –

Reorganisation, restructuring and relocation costs 2.9 –

VAT claims – (5.1)

34.6 (26.7)

Non-underlying

non-operating items

Interest on VAT claims – (0.5)

Interest rate swap movements 21.6 (109.2)

Contingent consideration fair value movement – 0.7

21.6 (109.0)

Total non-underlying

items 56.2 (135.7)

Impairment/(impairment reversal) of freehold and leasehold properties

At 2 July 2023 the Group’s effective freehold properties were revalued by independent

chartered surveyors on an open market value basis. The Group also undertook an

impairment review of its leasehold properties in the current and prior period.

The revaluation and impairment adjustments in respect of the above were recognised in the

revaluation reserve or income statement as appropriate.

The amount recognised in the income statement comprises:

2023

£m

2022

£m

Impairment of property, plant and equipment (note 11) 70.9 48.2

Reversal of past impairment of property, plant, and equipment (note 11) (40.0) (69.8)

Impairment of assets held for sale (note 19) – 0.3

Reversal of past impairment of assets held for sale (note 19) – (0.6)

Valuation fees 0.3 0.3

31.2 (21.6)

Special discretionary pension increase

A past service cost of £0.5 million (2022: £nil) arose in the current period as a result of a

one-off, and discretionary, increase to pensions in payment for members of the Marston’s

PLC Pension and Life Assurance Scheme.

Reorganisation, restructuring and relocation costs

During the current period the Group commenced the implementation of an operational

programme to simplify the business and drive efficiencies. The cost of implementing this

programme in the current period was £2.9 million (2022: £nil).

VAT claims

The Group submitted claims to HM Revenue & Customs (HMRC) in respect of the VAT treatment

of gaming machines from 1 January 2006 to 31 January 2013. Following detailed information

gathering to support the claims made the Group recognised the estimated amounts

receivable, including interest, in the prior period. The claims were settled by HMRC in the

current period.

Interest rate swap movements

The Group’s interest rate swaps are revalued to fair value at each balance sheet date.

Forir interest rate swaps which were designated as part of a hedging relationship a loss of

£3.0mi0 million (2022: gain of £23.9 million) has been recognised in the hedging reserve in respect

of theefe effective portion of the fair value movement and £2.1 million (2022: £6.2 million) has been

reclassified from the hedging reserve to underlying1 finance costs in the income statement in

respect of the cash paid in the period. A loss of £0.6 million (2022: £1.3 million) in respect of the

ineffective portion of the fair value movement has been recognised within non-underlying 1

items in the income statement. An amount representing the cash paid of £1.4 million (2022:

£1.5m.5 million) has subsequently been transferred from non-underlying1 items to underlying 1

finance costs to ensure that underlying1 finance costs reflect the resulting fixed rate paid on the

associated debt. As such there is an overall gain of £0.8 million (2022: £0.2 million) recognised

within non-underlying1 items. In addition, £9.3 million (2022: £10.8 million) of the balance

remaining in the hedging reserve in respect of discontinued cash flow hedges has been

reclassified to the income statement within non-underlying1 items.

Notes continued

For the 52 weeks ended 30 September 2023

117Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

4 NON-UNDERLYING

ITEMS CONTINUED

For interest rate swaps which were not designated as part of a hedging relationship a loss

of£9of £9.5 million (2022: gain of £111.2 million) in respect of the fair value movement has been

recognised within non-underlying1 items in the income statement. An amount representing

the cash received of £3.6 million (2022: cash paid of £8.6 million) has subsequently been

transferred from non-underlying1 items to underlying1 finance costs to ensure that underlying 1

finance costs reflect the resulting fixed rate paid on the associated debt. As such there is an

overall loss of £13.1 million (2022: gain of £119.8 million) recognised within non-underlying 1

items, which is equal to the change in the carrying value of the interest rate swaps in

thepee period.

Contingent consideration fair value movement

The contingent consideration on the disposal of Marston’s Beer Company Limited was

initiallyrecoy recognised at its fair value at the date of disposal and was subsequently remeasured

at its fair value at 2 October 2021 and the date of settlement during the prior period. The

movement in fair value was recognised within non-underlying

items in the prior period.

Impact of taxation

The current tax charge relating to the above non-underlying

items amounts to £nil

(2022:£2: £1.4m.4 million). The deferred tax credit relating to the above non-underlying

items

amounts to £14.9 million (2022: charge of £24.6 million).

5 EMPLOYEES

Employee costs

2023

£m

2022

£m

Wages and salaries 188.0 191.7

Social security costs 15.6 15.5

Pension costs 7.1 6.3

Share-based payments 0.4 0.5

Termination benefits 2.0 –

Employee costs 213.1 214.0

A non-underlying

charge of £2.5 million (2022: £nil) was included in employee costs in the

current period.

Average monthly number of employees

2023

Number

2022

Number

Bar staff 10,965 10,783

Management, administration and production 1,327 1,370

Key management personnel compensation

2023

£m

2022

£m

Short-term employee benefits 1.7 1.5

Share-based payments 0.1 0.3

1.8 1.8

Key management personnel have been defined as the Board of Marston’s PLC, including the

Executive Directors. Members of the Board are set out on pages 56 to 57 of the Annual Report

and Accounts 2023. Details of remuneration for Directors, including the highest paid Director,

are presented in the Annual Report on Remuneration on pages 79 to 81.

6 FINANCE COSTS AND INCOME

2023

£m

2022

£m

Finance costs

Bank borrowings 23.8 12.5

Securitised debt 32.4 35.0

Lease liabilities 19.3 18.9

Other lease related borrowings 22.3 21.3

Other interest payable and similar charges 2.6 4.2

Total finance costs 100.4 91.9

Finance income

Finance lease and other interest receivable (1.2) (0.9)

(1.2) (0.9)

Non-underlying

finance income

Interest on VAT claims – (0.5)

– (0.5)

Total finance income (1.2) (1.4)

Interest rate swap movements

Hedge ineffectiveness on cash flow hedges (net of cash paid) (0.8) (0.2)

Change in carrying value of interest rate swaps 13.1 (119.8)

Transfer of hedging reserve balance in respect of discontinued hedges 9.3 10.8

21.6 (109.2)

Contingent consideration fair value movement

Contingent consideration fair value movement – 0.7

– 0.7

Net finance costs/(income) 120.8 (18.0)

Notes continued

For the 52 weeks ended 30 September 2023

118 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

7 TAXATION

Income statement

2023

£m

2022

£m

Current tax

Current period 0.1 0.2

Adjustments in respect of prior periods (0.3) (0.3)

Charge in respect of tax on non-underlying

items – 1.4

(0.2) 1.3

Deferred tax

Current period 5.5 0.1

Adjustments in respect of prior periods (1.8) 0.2

(Credit)/charge in respect of tax on non-underlying

items (14.9) 24.6

(11.2) 24.9

Taxation (credit)/charge reported in the income statement (11.4) 26.2

Statement of comprehensive income

2023

£m

2022

£m

Remeasurement of retirement benefits (2.3) 5.8

Impairment and revaluation of properties 2.5 14.7

Hedging reserve movements 2.1 10.2

Taxation charge reported in the statement of comprehensive income 2.3 30.7

The actual tax rate for the period is higher (2022: lower) than the standard rate of corporation

tax of 22% (2022: 19%). The differences are explained below:

Tax reconciliation

2023

£m

2022

£m

(Loss)/profit before tax (20.7) 163.4

(Loss)/profit before tax multiplied by the corporation tax rate of 22%

(2022:12: 19%) (4.6) 31.0

Effect of:

Adjustments in respect of prior periods (2.1) (0.1)

Change in deferred tax asset not recognised 1.0 (8.5)

Net deferred tax credit in respect of land and buildings (1.2) (1.8)

Costs not deductible for tax purposes 0.1 –

Share of income of associate (2.2) (0.6)

Other amounts on which tax relief is available (1.2) (2.4)

Difference between deferred and current tax rates (1.2) 8.6

Taxation (credit)/charge (11.4) 26.2

The March 2021 Budget announced that the main rate of corporation tax would change

from 19% to 25% with effect from 1 April 2023. As such the Group’s results for the current period

have been taxed at an effective rate of 22%. This change was substantively enacted on

24Ma24 May 2021. This has increased the Group’s current tax charge accordingly. The deferred

taxatax assets and liabilities at 30 September 2023 have been calculated at 25% (2022: 25%).

The Group is within the Pillar Two income taxes legislation, which is effective for financial

periods beginning on or after 31 December 2023. The Group is currently assessing the impact

of the legislation on its future financial performance and although it does not anticipate that

the legislation will have a material impact on the Group’s results or financial position, this

cannot be confirmed until the assessment has been completed.

8 ORDINARY DIVIDENDS ON EQUITY SHARES

No dividends were paid during the current or prior period. A final dividend for 2023 has not

been proposed.

9 EARNINGS PER ORDINARY SHARE

Basic earnings/(loss) per share are calculated by dividing the profit/(loss) attributable to equity

shareholders by the weighted average number of ordinary shares in issue during the period,

excluding treasury shares and those held on trust for employee share schemes (note 29).

For diluted earnings/(loss) per share, the weighted average number of ordinary shares in issue

is adjusted to assume conversion of all dilutive potential ordinary shares. These represent

share options granted to employees where the exercise price is less than the weighted

average market price of the Company’s shares during the period.

Underlying

earnings/(loss) per share figures are presented to exclude the effect of

non-underlying

items. The Directors consider that the supplementary figures are a useful

indicator of performance.

2023 2022

Earnings

£m

Per share

amount

Earnings

£m

Per share

amount

Basic (loss)/earnings per share (9.3) (1.5) 137.2 21.7

Diluted (loss)/earnings per share (9.3) (1.5) 137.2 21.4

Underlying

earnings per share figures

Basic underlying ea1 earnings per share 32.0 5.1 27.5 4.3

Diluted underlying1 earnings per share 32.0 5.1 27.5 4.3

Notes continued

For the 52 weeks ended 30 September 2023

119Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

9 EARNINGS PER ORDINARY SHARE CONTINUED

2023

2022

Basic weighted average number of shares 633.3 633.1

Dilutive potential ordinary shares – 9.4

Diluted weighted average number of shares 633.3 642.5

In the current period in accordance with IAS 33 ‘Earnings per Share’ the potential ordinary

shares were not dilutive as their inclusion would reduce the loss per share.

10 GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill of £201.7 million was fully impaired in prior accounting periods and had a net book

amount of £nil as at 30 September 2023 and 1 October 2022.

Other intangible assets

Computer

software

£m

Cost

At 2 October 2022 50.1

Additions 3.5

Net transfers to assets held for sale and disposals (2.9)

At 30 September 2023 50.7

Amortisation

At 2 October 2022 15.0

Charge for the period 5.0

Net transfers to assets held for sale and disposals (2.2)

At 30 September 2023 17.8

Net book amount at 1 October 2022 35.1

Net book amount at 30 September 2023 32.9

Computer

software

£m

Cost

At 3 October 2021 48.4

Additions 3.5

Net transfers to assets held for sale and disposals (1.8)

At 1 October 2022 50.1

Amortisation

At 3 October 2021 12.3

Charge for the period 4.4

Net transfers to assets held for sale and disposals (1.7)

At 1 October 2022 15.0

Net book amount at 2 October 2021 36.1

Net book amount at 1 October 2022 35.1

Notes continued

For the 52 weeks ended 30 September 2023

120 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

11 PROPERTY, PLANT AND EQUIPMENT

Effective

freehold

land and

buildings

£m

Leasehold

land and

buildings

£m

Fixtures,

fittings,

tools and

equipment

£m

Total

£m

Cost or valuation

At 2 October 2022 1,682.4 434.1 284.9 2,401.4

Additions 25.5 11.1 28.8 65.4

Disposals (37.2) (12.4) (33.8) (83.4)

Transfers between asset classes (1.6) 1.6 – –

Net transfers from assets held for sale 0.3 – 0.2 0.5

Revaluation (24.3) – – (24.3)

At 30 September 2023 1,645.1 434.4 280.1 2,359.6

Depreciation

At 2 October 2022 – 140.7 149.7 290.4

Charge for the period – 14.0 26.5 40.5

Disposals – (11.6) (29.5) (41.1)

Net transfers from assets held for sale – – 0.1 0.1

Impairment – 4.5 0.4 4.9

At 30 September 2023 – 147.6 147.2 294.8

Net book amount at 1 October 2022 1,682.4 293.4 135.2 2,111.0

Net book amount at 30 September 2023 1,645.1 286.8 132.9 2,064.8

Effective

freehold

land and

buildings

£m

Leasehold

land and

buildings

£m

Fixtures,

fittings,

tools and

equipment

£m

Total

£m

Cost or valuation

At 3 October 2021 1,530.0 482.9 271.2 2,284.1

Additions 34.1 12.8 32.7 79.6

Disposals (5.0) (12.6) (18.9) (36.5)

Transfers between asset classes 49.0 (49.0) – –

Net transfers to assets held for sale (0.8) – (0.1) (0.9)

Revaluation 75.1 – – 75.1

At 1 October 2022 1,682.4 434.1 284.9 2,401.4

Depreciation

At 3 October 2021 0.1 157.2 142.6 299.9

Charge for the period – 14.3 25.5 39.8

Disposals (0.1) (12.6) (18.6) (31.3)

Transfers between asset classes 13.0 (13.0) – –

Revaluation and impairment movement (13.0) (5.2) 0.2 (18.0)

At 1 October 2022 – 140.7 149.7 290.4

Net book amount at 2 October 2021 1,529.9 325.7 128.6 1,984.2

Net book amount at 1 October 2022 1,682.4 293.4 135.2 2,111.0

During the prior period the Group purchased the options to buy the freehold of 17 leasehold

properties at the end of the lease term for a nominal amount. These properties were transferred

to effective freehold land and buildings in line with the Group’s accounting policy.

Notes continued

For the 52 weeks ended 30 September 2023

121Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

11 PROPERTY, PLANT AND EQUIPMENT CONTINUED

The net book amount of land and buildings is split as follows:

2023

£m

2022

£m

Freehold land and buildings 1,477.2 1,507.7

Leasehold land and buildings with a term greater than 100 years at

acquisition/commencement 167.9 174.7

Leasehold land and buildings with a term less than 100 years at

acquisition/commencement 286.8 293.4

1,931.9 1,975.8

If the effective freehold land and buildings had not been revalued, the historical cost net

book amount would be £1,149.5 million (2022: £1,183.7 million).

Cost at 30 September 2023 includes £nil (2022: £8.5 million) of assets in the course

ofc construction.

Interest costs of £0.1 million (2022: £0.2 million) were capitalised in the period in respect of the

financing of major projects. The capitalisation rate used was 6%.

The net profit on disposal of property, plant and equipment, intangible assets and properties

classified as held for sale was £7.9 million (2022: £2.7 million).

Capital expenditure authorised and committed at the period end but not provided for in the

financial statements was £1.0 million (2022: £4.2 million).

The net book amount of effective freehold land and buildings held as part of sale

andled leaseback arrangements that do not fall within the scope of IFRS 16 ‘Leases’

was£was £251.8m.8 million (2022: £265.3 million).

The disaggregation of land and buildings into assets leased to tenants under operating

leases and those held and used by the Group is as follows:

2023 2022

Effective freehold land

andbud buildings

Leased to

tenants

£m

Used by

the Group

£m

Total

£m

Leased to

tenants

£m

Used by

the Group

£m

Total

£m

Cost or valuation 173.8 1,471.3 1,645.1 201.2 1,481.2 1,682.4

Depreciation – – – – – –

Net book amount 173.8 1,471.3 1,645.1 201.2 1,481.2 1,682.4

2023 2022

Leasehold land and buildings

Leased to

tenants

£m

Used by

the Group

£m

Total

£m

Leased to

tenants

£m

Used by

the Group

£m

Total

£m

Cost 21.6 412.8 434.4 23.9 410.2 434.1

Depreciation (8.3) (139.3) (147.6) (8.3) (132.4) (140.7)

Net book amount 13.3 273.5 286.8 15.6 277.8 293.4

The services provided to the tenants are considered to be significant to the arrangement as

a whole such that the properties do not qualify as investment properties under IAS 40

‘Investment Property’.

Revaluation/impairment

At 2 July 2023 independent chartered surveyors revalued the Group’s effective

freeholdprod properties on an open market value basis. During the current and prior period

various assetswesets were also reviewed for impairment and/or material changes in value.

Thesevaese valuation adjustments were recognised in the revaluation reserve or the income

statement asaps appropriate.

2023

£m

2022

£m

Income statement:

Impairment (70.9) (48.2)

Reversal of past impairment 40.0 69.8

(30.9) 21.6

Revaluation reserve:

Unrealised revaluation surplus 95.6 105.8

Reversal of past revaluation surplus (93.9) (34.3)

1.7 71.5

Net (decrease)/increase in shareholders’ equity/property, plant

andeqd equipment (29.2) 93.1

Notes continued

For the 52 weeks ended 30 September 2023

122 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

11 PROPERTY, PLANT AND EQUIPMENT CONTINUED

Fair value of effective freehold land and buildings

IFRS 13 ‘Fair Value Measurement’ requires fair value measurements to be recognised using a

fair value hierarchy that reflects the significance of the inputs used in the measurements,

according to the following levels:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the

asset or liability, either directly or indirectly.

Level 3 – inputs for the asset or liability that are not based on observable market data.

The tables below show the level in the fair value hierarchy into which the fair value

measurements of effective freehold land and buildings have been categorised:

2023

Recurring fair value measurements

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Effective freehold land and buildings – – 1,645.1 1,645.1

2022

Recurring fair value measurements

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Effective freehold land and buildings – – 1,682.4 1,682.4

There are two inputs to the fair value measurement of the public house assets, being the fair

maintainable trade (an unobservable Level 3 input) and the multiple applied (an indirectly

observable Level 2 input). It is considered that the unobservable Level 3 input for the fair

maintainable trade is a significant input to the valuation and as such Level 3 is considered to

be the most appropriate categorisation for these fair value measurements. There were no

transfers between categories during the current or prior period.

A reasonably possible increase of 10% in the multiple would increase the fair value by

£173.2m.2 million and a reasonably possible decrease of 10% in the multiple would decrease

thefaie fair value by £173.2 million. A reasonably possible increase of 4% in the fair maintainable

trade would increase the fair value by £69.3 million and a reasonably possible decrease of 4%

in the fair maintainable trade would decrease the fair value by £69.3 million. These are based

on the top ends of observable multiples achieved in the market and historic movements in

the average fair maintainable trade.

The Group’s effective freehold land and buildings are revalued by external independent

qualified valuers on an annual basis using open market values so that the carrying value of

an asset does not differ significantly from its fair value at the balance sheet date. The annual

valuations are determined via third-party inspection of approximately a third of the sites, and

a desktop valuation of the remaining two-thirds of the sites, such that all sites are individually

inspected every three years. The last external valuation of the Group’s effective freehold land

and buildings was performed as at 2 July 2023. The Group has an internal team of qualified

valuers and at each reporting date the estate is reviewed for any indication of significant

changes in value. Where this is the case internal valuations are performed on a basis

consistent with those performed externally. The Group has concluded that the valuation as

at 2 July 2023 does not differ materially from that which would have been determined using

fair value as at 30 September 2023.

Level 3 recurring fair value measurements

2023

£m

2022

£m

At beginning of the period 1,682.4 1,529.9

Additions 25.5 34.1

Transfers (1.6) 36.0

Disposals (37.2) (4.9)

Net transfers from/(to) assets held for sale 0.3 (0.8)

Revaluation gains and losses recognised in profit or loss (26.0) 16.6

Revaluation gains and losses recognised in other comprehensive income 1.7 71.5

At end of the period 1,645.1 1,682.4

Revaluation gains and losses recognised in profit or loss in respect of Level 3 recurring fair

value measurements are included within net operating expenses in the income statement

and comprise net unrealised losses of £24.8 million (2022: gains of £16.6 million) and net

realised losses of £1.2 million (2022: £nil).

Notes continued

For the 52 weeks ended 30 September 2023

123Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

11 PROPERTY, PLANT AND EQUIPMENT CONTINUED

Impairment testing of leasehold properties

Leasehold properties, comprising leasehold land and buildings and associated fixtures,

fittings, tools and equipment and computer software, are held under the cost model. These

properties were reviewed for impairment in the current and prior period by comparing the

recoverable amount of each property to the carrying amount of the assets. Recoverable

amount is the higher of value in use and fair value less costs to sell. The key assumptions used

in the value in use calculations were the future trading cash flows of the properties, a pre-tax

discount rate of 12.2% (2022: 10.3%) and a long-term growth rate of 1.8% (2022: 1.8%) which is

net of a 0.2% adjustment to reflect the potential impact of climate change.

Changes in these key assumptions could impact the impairment charge/reversal recognised

for these assets. The future trading cash flows used in the value in use calculations are property

level EBITDA less maintenance expenditure forecasts. If the forecast cash flows were to decline

by 4% then there would be a £0.2 million increase in the impairment recognised. If the pre-tax

discount rate were to increase by 0.5% it would increase the impairment by £0.2 million. If the

long-term growth rate were to decrease by 0.5% it would increase the impairment by

£0.2m0.2 million.

Market capitalisation

Uncertainty and restricted trading during recent financial periods, including COVID-19 and

thecose cost-of-living crisis, have negatively impacted the Group’s share price. This share price

suppression has resulted in a gap between the Group’s market capitalisation and asset values.

The Group has performed an assessment to determine whether the asset values are impaired.

The impairment review indicated that there was sufficient headroom between the asset values

and the enterprise value of the Group. A recoverable amount was also estimated on a value in

use basis which was based on a pre-tax discount rate of 9.7% and a long-term growth rate of

1.8% which is net of a 0.2% adjustment to reflect the potential impact of climate change. No

reasonably possible change in the assumptions used would have resulted in an impairment.

12 INTERESTS IN ASSOCIATES

The Group holds a 40% interest in Carlsberg Marston’s Limited, the sole supplier of drinks to the

Group. The principal place of business of Carlsberg Marston’s Limited is the UK.

The tables below summarise the financial information of Carlsberg Marston’s Limited as

included in its own financial statements for the period from 1 October 2022 to 30 September

2023, adjusting for differences in accounting policies. The comparison is for the period from

1Octo1 October 2021 to 30 September 2022.

2023

£m

2022

£m

Non-current assets 290.4 239.3

Current assets 263.8 299.5

Current liabilities (334.4) (360.4)

Non-current liabilities (100.7) (35.8)

Net assets 119.1 142.6

Group’s share of net assets (40%) 47.6 57.0

Goodwill 203.9 203.9

Elimination of unrealised profit on upstream sales (0.6) (0.6)

Carrying amount of interest in associate 250.9 260.3

2023

£m

2022

£m

Revenue 877.2 836.9

Profit from continuing operations 24.7 8.2

Other comprehensive income/(expense) 1.9 (2.0)

Total comprehensive income 26.6 6.2

Group’s share of profit from continuing operations (40%) 9.9 3.3

Group’s share of other comprehensive income/(expense) (40%) 0.8 (0.8)

Group’s share of total comprehensive income 10.7 2.5

Details of related party transactions with Carlsberg Marston’s Limited are as follows:

Transaction amount Balance outstanding

2023

£m

2022

£m

2023

£m

2022

£m

Purchase of goods (181.5) (171.7) (29.4) (34.3)

Rendering of services – 1.7 – –

Settlement of liabilities on behalf of associate – 121.8 – (5.9)

Dividends from associate 21.6 19.4 – –

Receipt of cash on behalf of associate (1.6) (249.7) – (0.5)

There was a transitional services agreement in place between the Group and Carlsberg

Marston’s Limited whereby the transactions for Marston’s Beer Company Limited continued to

be processed through the Group’s systems and bank accounts until 29 January 2022.

All outstanding balances are to be settled within six months and are unsecured.

Notes continued

For the 52 weeks ended 30 September 2023

124 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

12 INTERESTS IN ASSOCIATES CONTINUED

Due to the size of the Group’s investment in Carlsberg Marston’s Limited, and the potential

sensitivity of the recoverable amount of the investment to a change in assumptions, an

impairment review was undertaken under IAS 36 ‘Impairment of Assets’. The recoverable

amount was estimated on a value in use basis. This was based on forecast cash flows

approved by the board of Carlsberg Marston’s Limited, a long-term growth rate of 1.8%

andapred a pre-tax discount rate equivalent to 9.2%. The impairment review indicated there

wasswas sufficient headroom over the carrying amount of the investment and consequently

noino impairment has been recognised. A number of different potential downside scenarios

were considered and changing each key assumption to the limit of the reasonably possible

downside did not result in an impairment. A severe downside scenario which considered

acoma combination of reduced cash flows together with a decrease in growth rate and a large

increase in discount rate could lead to a small impairment.

13 OTHER NON-CURRENT ASSETS

2023

£m

2022

£m

Finance lease receivables 15.0 17.9

Further detail regarding the impairment of finance lease receivables is provided in note 25.

14 DEFERRED TAX

Deferred tax is calculated on temporary differences between tax bases of assets and

liabilities and their carrying amounts under the liability method using a tax rate of 25%

(2022:252: 25%). The movement on the deferred tax accounts is shown below:

Net deferred tax (asset)/liability

2023

£m

2022

£m

At beginning of the period 8.0 (47.6)

(Credited)/charged to the income statement (11.2) 24.9

Charged/(credited) to equity:

Impairment and revaluation of properties 2.5 14.7

Hedging reserve 2.1 10.2

Retirement benefits (2.3) 5.8

At end of the period (0.9) 8.0

Recognised in the balance sheet

2023

£m

2022

£m

Deferred tax liabilities (after offsetting) – 8.0

Deferred tax assets (after offsetting) (0.9) –

(0.9) 8.0

The movements in deferred tax assets and liabilities (prior to the offsetting of balances within

the same jurisdiction as permitted by IAS 12 ‘Income Taxes’) during the period are shown

below. Deferred tax assets and liabilities are only offset where there is a legally enforceable

right of offset and there is an intention to settle the balances net.

Deferred tax liabilities

Pensions

£m

Accelerated

capital

allowances

£m

Revaluation

of properties

£m

Rolled over

capital

gains

£m

Total

£m

At 2 October 2022 3.8 45.7 55.9 4.6 110.0

Charged/(credited) to the income

statement – 3.2 (2.8) (0.2) 0.2

(Credited)/charged to equity (0.6) – 2.5 – 1.9

At 30 September 2023 3.2 48.9 55.6 4.4 112.1

Deferred tax assets

Tax losses

£m

Interest

rate swaps

£m

Other

£m

Total

£m

At 2 October 2022 (57.4) (3.9) (40.7) (102.0)

Credited to the income statement (3.2) (5.6) (2.6) (11.4)

(Credited)/charged to equity (1.7) 2.1 – 0.4

At 30 September 2023 (62.3) (7.4) (43.3) (113.0)

Net deferred tax (asset)/liability

At 1 October 2022 8.0

At 30 September 2023 (0.9)

Notes continued

For the 52 weeks ended 30 September 2023

125Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

14 DEFERRED TAX CONTINUED

Deferred tax liabilities

Pensions

£m

Accelerated

capital

allowances

£m

Revaluation

properties

£m

Rolled over

capital

gains

£m

Other

£m

Total

£m

At 3 October 2021 – 30.6 37.6 7.4 5.0 80.6

Charged/(credited) to

the income statement – 15.1 3.4 (2.8) (5.0) 10.7

Charged to equity 3.8 – 14.9 – – 18.7

At 1 October 2022 3.8 45.7 55.9 4.6 – 110.0

Deferred tax assets

Pensions

£m

Tax losses

£m

Interest

rate swaps

£m

Other

£m

Total

£m

At 3 October 2021 (3.6) (49.4) (41.3) (33.9) (128.2)

Charged/(credited) to the income

statement 1.6 (8.0) 27.2 (6.6) 14.2

Charged/(credited) to equity 2.0 – 10.2 (0.2) 12.0

At 1 October 2022 – (57.4) (3.9) (40.7) (102.0)

Net deferred tax liability/(asset)

At 2 October 2021 (47.6)

At 1 October 2022 8.0

Deferred tax assets have been recognised in respect of all tax losses and other temporary

differences where it is probable that these assets will be recovered.

Determining the recoverability of the deferred tax asset in respect of trading items requires

judgements to be made about the future profitability of the Group. The Group generated

significant tax losses in prior periods due to the impact of COVID-19 on its business operations,

including enforced pub closures and restrictions on trading. The base case forecast from the

going concern assessment set out in note 1 was used to forecast future taxable profits and

allowing for a range of reasonably possible outcomes it is estimated that the deferred tax

asset in respect of trading items will be recovered within a period of five years. As such it has

been recognised in full.

A deferred tax asset has not been recognised in respect of deductible temporary

differencesreces relating to capital losses of £42.9 million (2022: £39.1 million) due to uncertainty

over its future recoverability.

15 RETIREMENT BENEFITS

During the period the Group contributed to a funded defined benefit pension plan and a

number of defined contribution pension plans. These plans are considered to be related

parties of the Group.

Defined contribution plans

Pension costs for defined contribution plans are as follows:

2023

£m

2022

£m

Defined contribution plans 6.6 6.3

Defined benefit plan

The Marston’s PLC Pension and Life Assurance Scheme is a final salary pension plan which

provides benefits to members in the form of a guaranteed level of pension payable for life.

The plan closed to future accrual on 30 September 2014 and the link to future salary increases

was also removed.

The plan operates under the UK regulatory framework and is governed by a board of

Trusteescotees composed of plan participants and representatives of the Group. The Trustees

makeinveske investment decisions and set the required contribution rates based on independent

actuarial advice.

The key risks to which the plan exposes the Group are as follows:

Volatility of plan assets

Assets held by the plan are invested in a diversified portfolio of equities, bonds and other

assets. Volatility in asset values will lead to movements in the net defined benefit asset/liability

reported in the balance sheet as well as movements in the net interest on the net defined

benefit asset/liability reported in the income statement.

Changes in bond yields

Corporate bond yields are used to determine the plan’s defined benefit obligation. Lower

yields will lead to an increased defined benefit obligation. Increases in the defined benefit

obligation will be partly offset by an increase in the value of government and corporate

bonds held by the plan.

Notes continued

For the 52 weeks ended 30 September 2023

126 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

15 RETIREMENT BENEFITS CONTINUED

Inflation risk

A large proportion of the plan’s obligations are linked to inflation. Higher inflation will lead to

an increased defined benefit obligation. Increases in the defined benefit obligation will be

partly offset by an increase in inflation-linked assets held by the plan.

Changes in life expectancy

An increase in the life expectancy of members will result in benefits being paid out for longer,

leading to an increase in the defined benefit obligation.

The movements in the fair value of plan assets and the present value of the defined benefit

obligation during the period were:

Fair value

of plan assets

Present value

of defined

benefit obligation

Net surplus/(deficit)

2023

£m

2022

£m

2023

£m

2022

£m

2023

£m

2022

£m

At beginning of the period 374.6 527.8 (359.5) (542.2) 15.1 (14.4)

Past service cost – – (0.5) – (0.5) –

Interest income/(expense) 19.1 10.4 (18.2) (10.6) 0.9 (0.2)

Remeasurements:

Return on plan assets

(excluding interest income) (33.4) (147.3) – – (33.4) (147.3)

Effect of changes in

financial assumptions – – 23.0 181.5 23.0 181.5

Effect of changes in

demographic assumptions – – 6.6 0.7 6.6 0.7

Effect of experience

adjustments – – (5.4) (11.6) (5.4) (11.6)

Cash flows:

Employer contributions 8.1 7.3 – – 8.1 7.3

Administrative expenses

paid from plan assets (1.5) (0.9) – – (1.5) (0.9)

Benefits paid (22.2) (22.7) 22.2 22.7 – –

At end of the period 344.7 374.6 (331.8) (359.5) 12.9 15.1

Pension costs recognised in the income statement

A charge of £0.5 million (2022: £nil) comprising the past service cost is included within

employee costs, a credit of £0.9 million (2022: charge of £0.2 million) comprising the net

interest on the net defined benefit asset/liability is included within finance costs and a

charge of £1.5 million (2022: £0.9 million) comprising the administrative expenses paid from

plan assets is included within finance costs.

A one-off, and discretionary, increase to pensions in payment for members of the Marston’s

PLC Pension and Life Assurance Scheme arose in the current period. The resulting additional

past service cost of £0.5 million (2022: £nil) was classified as a non-underlying

item (note 4).

Recognition of net defined benefit asset

The Group has the ability to recognise a pension surplus from the defined benefit pension

plan (measured under IAS 19 ‘Employee Benefits’) in the current period as the Scheme Rules

provide the Group with an unconditional right to a refund of a surplus once the last benefit

has been paid to the last scheme member.

It is considered that contributions payable under a minimum funding requirement would be

available as a refund. As such where the fair value of plan assets exceeds the present value

of the defined benefit obligation, the Group recognises an asset at the fair value of plan

assets less the present value of the defined benefit obligation.

Pension costs are assessed in accordance with the advice of independent, professionally

qualified actuaries. An updated actuarial valuation of the plan was performed by Mercer as

at 30 September 2023 for the purposes of IAS 19. The principal assumptions made by the

actuaries were:

2023 2022

Discount rate 5.6% 5.2%

Rate of increase in pensions – 5% LPI 3.0% 3.2%

Rate of increase in pensions – 2.5% LPI 2.0% 2.1%

Inflation assumption (RPI) 3.2% 3.5%

Inflation assumption (CPI) 2.5% 2.8%

Employed deferred revaluation 2.5% 2.8%

Life expectancy for deferred members from age 65 (years)

Male 22.4 22.7

Female 25.0 25.4

Life expectancy for current non-insured pensioners from age 65 (years)

Male 20.4 20.9

Female 23.0 23.6

Life expectancy for current insured pensioners from age 65 (years)

Male 21.3 21.6

Female 23.4 24.0

Notes continued

For the 52 weeks ended 30 September 2023

127Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

15 RETIREMENT BENEFITS CONTINUED

Following the September 2022 Mini Budget, a period of market volatility in the weeks

preceding the prior period balance sheet date was observed, particularly in the UK bond/

giltmilt markets. All assumptions made within the actuarial valuation of the plan took into

consideration market conditions as at 1 October 2022. To counteract the high levels of

inflation and fall in the value of sterling following the September 2022 Mini Budget, the Bank

ofEof England signalled future increases in interest rates. This expectation of future increases in

interest rates led to significant falls in the value of fixed interest investments (such as gilts and

corporate bonds) with corresponding increases in yields. The Marston’s PLC Pension and Life

Assurance Scheme uses Liability Driven Investment strategies (LDIs) which use a combination

of gilts, cash and derivatives to hedge long-term interest and inflation risks. The pension plan

met collateral calls required for the LDI investments through a number of disinvestments. The

hedge ratios remained in line with the target.

There is no explicit adjustment to allow for the impact of COVID-19 in the mortality

assumptions, however the mortality assumptions have been updated to include the latest

projections of improvements in life expectancy which include a weighting applied to recent

mortality experience.

The sensitivity of the defined benefit obligation to changes in the principal actuarial

assumptions is:

Change in assumption Increase in assumption Decrease in assumption

Discount rate 0.50%

Decrease obligation

by5.by 5.2%

Increase obligation

by5.by 5.7%

Inflation assumption 0.25%

Increase obligation

by1by 1.8%

Decrease obligation

by1by 1.8%

Life expectancy One year

Increase obligation

by3.by 3.2%

Decrease obligation

by3.1by 3.1%

The above sensitivity analyses have been determined by changing one assumption

whilehle holding all other assumptions constant. The calculations are approximate in nature

andfud full detailed calculations could lead to a different result. In practice, interrelationships

existbett between the assumptions, particularly between the discount rate and price inflation.

Thestae stand-alone sensitivity analyses noted above do not consider the effect of these

interrelationships. Any movements in obligations arising from assumption changes are likely

tobe ato be accompanied by movements in asset values, and so the impact on the net defined

benefit asset/liability may be different to the impact on the obligation calculated by the

sensitivity analysis.

When calculating the above sensitivities the same method has been applied as when

calculating the net defined benefit asset/liability in the balance sheet i.e., the present

valueof tue of the defined benefit obligation calculated using the Projected Unit Credit Method.

Plan assets

2023

£m

2022

£m

Equities 3.4 45.9

Bonds/Gilts 125.5 92.3

Cash/Pooled investments 56.1 62.2

Buy-in policies (matching annuities) 159.7 174.2

344.7 374.6

The Group’s balance sheet date of 30 September 2023 is a Saturday and, accordingly, the

fair value of plan assets have been calculated as at 29 September 2023. There were no

significant transactions between the respective reporting dates.

The plan holds £148.6 million of quoted assets in the nature of equities, bonds, gilts and

pooled investments which are traded in active markets with BlackRock, Insight and Ruffer.

The plan also holds £31.0 million of unquoted assets in the nature of bonds, gilts and pooled

investments with M&G and Ruffer which are valued using inputs that reflect the assumptions

that market participants would use in pricing the asset based on market data from

independent sources.

The plan includes qualifying insurance policies which are valued using the Group’s own

assessment of the assumptions market participants would use in pricing the asset, based on

the best information available. The proceeds of the policies can only be used to pay or fund

employee benefits of the Scheme, are not available to the Group’s creditors and cannot be

paid to the Group.

The Scheme assets do not include any property, plant or equipment occupied by, or used by,

the Group.

The actual return on plan assets was a loss of £14.3 million (2022: £136.9 million). A proportion

of the defined benefit obligation has been secured by buy-in policies and as such this

proportion of liabilities is matched by annuities. The Trustees of the plan hold a range of assets

and are aiming to better align the cash flows from these to those of the plan. They are also

working with the Group to de-risk their portfolio further.

Following further improvement in the funding position of the plan, and further rises in long

term gilt yields, the Trustees took the decision to fully disinvest from the remaining direct

equity allocation and increase the level of interest rate and inflation hedging. This transition

took place at the end of August 2023.

Notes continued

For the 52 weeks ended 30 September 2023

128 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

15 RETIREMENT BENEFITS CONTINUED

The Group is aiming to eliminate the plan’s funding deficit in the medium term. A schedule

ofcoof contributions was agreed as part of the 30 September 2020 triennial valuation and

contributions of £0.5 million per month are payable until 30 November 2025. Contributions

are also payable in respect of the plan’s expenses. The next triennial valuation will be

performed as at 30 September 2023.

The employer contributions expected to be paid during the financial period ending

28S28 September 2024 amount to £7.6 million.

The weighted average duration of the defined benefit obligation is 11 years (2022: 12 years).

Post-retirement medical benefits

A gain of £nil (2022: £nil) in respect of the remeasurement of post-retirement medical benefits

has been included in the statement of comprehensive income.

16 DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate swaps

2023

£m

2022

£m

Non-current assets 2.7 1.8

Current assets 1.1 3.3

Non-current liabilities (37.4) (25.5)

(33.6) (20.4)

Details of the Group’s interest rate swaps are provided in note 25.

17 INVENTORIES

2023

£m

2022

£m

Raw materials and consumables 4.3 3.8

Finished goods 10.6 8.8

14.9 12.6

18 TRADE AND OTHER RECEIVABLES

2023

£m

2022

£m

Trade receivables 12.2 11.2

Prepayments and accrued income 9.3 15.6

Finance lease receivables 1.7 1.8

Other receivables 3.7 1.5

26.9 30.1

Further detail regarding the impairment of trade receivables, finance lease receivables and

other receivables is provided in note 25. All of the Group’s trade receivables are

denominated in pounds sterling.

At 30 September 2023 the value of collateral held in the form of cash deposits was £5.6 million

(2022: £5.6 million).

19 ASSETS HELD FOR SALE

2023

£m

2022

£m

Properties 1.4 4.8

In accordance with IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’,

properties categorised as held for sale have been written down to their fair value less costs to

sell if this was below their carrying amount. This is a non-recurring fair value measurement

falling within Level 2 of the fair value hierarchy. These Level 2 fair values have been obtained

using a market approach and are derived from sales prices in recent transactions involving

comparable properties.

During the current and prior period, all properties classified as held for sale were reviewed

forifor impairment or reversal of past impairment. This review identified an impairment of £nil

(2022: £0.3 million) and a reversal of past impairment of £nil (2022: £0.6 million) which have

been recognised in the income statement.

Notes continued

For the 52 weeks ended 30 September 2023

129Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

20 BORROWINGS

Current

2023

£m

2022

£m

Bank borrowings (2.6) (0.7)

Securitised debt 41.1 39.0

Lease liabilities 17.8 11.2

Other lease related borrowings (0.4) (0.4)

Other borrowings 10.0 15.0

65.9 64.1

Non-current

2023

£m

2022

£m

Bank borrowings 228.2 214.6

Securitised debt 560.2 601.3

Lease liabilities 362.6 366.6

Other lease related borrowings 338.4 338.0

Other borrowings 40.0 40.0

Preference shares 0.1 0.1

1,529.5 1,560.6

Bank borrowings are secured by a floating charge over certain of the Group’s properties and

other assets.

Other lease related borrowings represent amounts due under sale and leaseback

arrangements that do not fall within the scope of IFRS 16 ‘Leases’. The Group has an option to

repurchase each leased property for a nominal amount at the end of the lease. The leases

have terms of 35 to 40 years and rents which are linked to RPI, subject to a cap and collar.

The Group has 75,000 (2022: 75,000) preference shares of £1 each in issue at the balance

sheet date. The preference shares carry the right to a fixed cumulative preferential dividend

at the rate of 6% per annum (they are also entitled to a non-cumulative dividend of 1% per

annum provided that dividends of not less than £24,000 have been paid on the ordinary

shares in that year). They participate in the event of a winding-up and on a return of capital

and carry the right to attend and vote at general meetings of the Company, carrying four

votes per share.

All of the Group’s borrowings are denominated in pounds sterling. In respect of the Liquidity

covenant associated with the Group’s £40 million private placement borrowings for the fiscal

month ending on or about 31 October 2022, there was a technical default, for which waivers

were secured. There were no instances of default, including covenant terms in the prior period.

The Group obtained certain covenant waivers from its lenders in the prior period as a result of

the COVID-19 outbreak.

Maturity of borrowings

The maturity profile of the carrying amount of the Group’s borrowings at the period end was

as follows:

2023 2022

Due:

Gross

borrowings

£m

Unamortised

issue costs

£m

Net

borrowings

£m

Gross

borrowings

£m

Unamortised

issue costs

£m

Net

borrowings

£m

Within one year 69.3 (3.4) 65.9 65.6 (1.5) 64.1

In more than one year but

less than two years 323.2 (1.6) 321.6 266.8 (1.2) 265.6

In more than two years but

less than five years 180.8 (2.7) 178.1 211.8 (2.7) 209.1

In more than five years 1,051.7 (21.9) 1,029.8 1,108.6 (22.7) 1,085.9

1,625.0 (29.6) 1,595.4 1,652.8 (28.1) 1,624.7

Fair value of borrowings

The carrying amount and the fair value of the Group’s borrowings are as follows:

Carrying amount Fair value

2023

£m

2022

£m

2023

£m

2022

£m

Bank borrowings 229.0 215.0 229.0 215.0

Securitised debt 603.8 643.2 520.8 556.7

Lease liabilities 380.4 377.8 380.4 377.8

Other lease related borrowings 361.7 361.7 361.7 361.7

Other borrowings 50.0 55.0 50.0 55.0

Preference shares 0.1 0.1 0.1 0.1

1,625.0 1,652.8 1,542.0 1,566.3

Notes continued

For the 52 weeks ended 30 September 2023

130 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

20 BORROWINGS CONTINUED

The fair value of the Group’s securitised debt is based on quoted market prices and is within

Level 1 of the fair value hierarchy. The fair values of all of the Group’s other borrowings

approximate to their carrying amounts and are within Level 2 of the fair value hierarchy.

During the current period the Group successfully secured a non-substantial modification of

itsbas bank and private placement debt facilities with an amendment and extension to 2025.

The Group’s sources of funding include its securitised debt, a £300.0 million bank facility

available until 2025, of which £229.0 million was drawn at 30 September 2023, a £40.0 million

private placement in place until 2025, and a £5.0 million seasonal overdraft facility which

extends to £20.0 million between the months of January and May.

21 SECURITISED DEBT

On 9 August 2005 £805.0 million of secured loan notes were issued in connection with the

securitisation of 1,592 of the Group’s pubs held in Marston’s Pubs Limited. On 22 November 2007,

a further £330.0 million of secured loan notes (tranches A4 and AB1) were issued in connection

with the securitisation of an additional 437 of the Group’s pubs, also held in Marston’s Pubs

Limited. The loan notes are secured over the properties and their future income streams and

were issued by Marston’s Issuer PLC, a special purpose entity. On 15 January 2014 all of the AB1

notes were repurchased by the Group at par and immediately cancelled.

The carrying value of the securitised pubs at 30 September 2023 was £1,166.6 million

(2022:£2: £1,166.7 million).

The securitisation is governed by various covenants, warranties and events of default, many of

which apply to Marston’s Pubs Limited. These include covenants regarding the maintenance

and disposal of securitised properties and restrictions on the ability to move cash to other

companies within the Group. The Group had in place certain covenant waivers from its

bondholders in the prior period as a result of the COVID-19 outbreak.

The tranches of securitised debt have the following principal terms:

Tranche

2023

£m

2022

£m Interest

Principal repayment

period – by instalments

Expected

average

life

Expected

maturity

date

A2 129.2 157.3 Fixed/floating 2023 to 2027 4 years 2027

A3 200.0 200.0 Fixed/floating 2027 to 2032 9 years 2032

A4 119.6 130.9 Floating 2023 to 2031 8 years 2031

B 155.0 155.0 Fixed/floating 2032 to 2035 12 years 2035

603.8 643.2

The interest payable on each tranche is as follows:

Tranche Before step up After step up Step up date

A2 5.1576% SONIA + 0.1193% + 1.32% July 2019

A3 5.1774% SONIA + 0.1193% + 1.45% April 2027

A4 3-month LIBOR + 0.65% SONIA + 0.1193% + 1.625% October 2012

B 5.6410% SONIA + 0.1193% + 2.55% July 2019

The Group agreed with its bondholders to replace 3-month LIBOR with the compounded

Sterling Overnight Index Average (SONIA) plus 0.1193% after the discontinuance of LIBOR.

All floating rate notes are economically hedged in full by the Group using interest rate swaps

whereby all interest payments are swapped to fixed interest payable.

At 30 September 2023 Marston’s Pubs Limited held cash of £20.0 million (2022: £21.0 million),

which was governed by certain restrictions under the covenants associated with the

securitisation. In addition, Marston’s Issuer PLC held cash of £0.1 million (2022: £0.1 million).

Notes continued

For the 52 weeks ended 30 September 2023

131Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

22 TRADE AND OTHER PAYABLES

2023

£m

2022

£m

Trade payables 66.3 95.5

Other taxes and social security 25.6 25.1

Accruals and deferred income 65.6 71.3

Other payables 12.9 12.5

170.4 204.4

23 PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Property leases

2023

£m

2022

£m

At beginning of the period 4.3 11.1

Released in the period (0.7) (7.0)

Provided in the period 0.8 0.9

Unwinding of discount 0.2 0.1

Utilised in the period (0.6) (0.8)

At end of the period 4.0 4.3

Recognised in the balance sheet

2023

£m

2022

£m

Current liabilities 1.4 1.0

Non-current liabilities 2.6 3.3

4.0 4.3

Payments are expected to continue for periods of 1 to 46 years (2022: 1 to 47 years).

Thereiere isnot cos not considered to be any significant uncertainty regarding the amount and timing

ofthof these payments.

24 OTHER NON-CURRENT LIABILITIES

2023

£m

2022

£m

Other liabilities 7.1 6.5

25 FINANCIAL INSTRUMENTS

Financial instruments by category

At 30 September 2023

Assets at

fair value

through

profit or

loss

£m

Assets at

amortised

cost

£m

Total

£m

Assets as per the balance sheet

Derivative financial instruments 3.8 – 3.8

Finance lease receivables (before provision) – 18.8 18.8

Trade receivables (before provision) – 12.7 12.7

Other receivables (before provision) – 4.8 4.8

Other cash deposits – 3.1 3.1

Cash and cash equivalents – 26.5 26.5

3.8 65.9 69.7

At 30 September 2023

Derivatives

used for

hedging

£m

Liabilities

at fair

value

through

profit or

loss

£m

Other

financial

liabilities

£m

Total

£m

Liabilities as per the balance sheet

Derivative financial instruments 5.4 32.0 – 37.4

Borrowings – – 1,595.4 1,595.4

Trade payables – – 66.3 66.3

Other payables – – 12.9 12.9

5.4 32.0 1,674.6 1,712.0

Notes continued

For the 52 weeks ended 30 September 2023

132 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

25 FINANCIAL INSTRUMENTS CONTINUED

At 1 October 2022

Assets

at fair

value

through

profit or loss

£m

Assets at

amortised

cost

£m

Total

£m

Assets as per the balance sheet

Derivative financial instruments 5.1 – 5.1

Finance lease receivables (before provision) – 23.5 23.5

Trade receivables (before provision) – 11.9 11.9

Other receivables (before provision) – 2.8 2.8

Other cash deposits – 3.0 3.0

Cash and cash equivalents – 27.7 27.7

5.1 68.9 74.0

At 1 October 2022

Derivatives

used for

hedging

£m

Liabilities

at fair

value

through

profit or

loss

£m

Other

financial

liabilities

£m

Total

£m

Liabilities as per the balance sheet

Derivative financial instruments 5.3 20.2 – 25.5

Borrowings – – 1,624.7 1,624.7

Trade payables – – 95.5 95.5

Other payables – – 12.5 12.5

5.3 20.2 1,732.7 1,758.2

Fair values of financial instruments

The only financial instruments which the Group holds at fair value are derivative

financialinl instruments, which are classified as at fair value through profit or loss or

derivativesusives used for hedging.

IFRS 13 ‘Fair Value Measurement’ requires fair value measurements to be recognised using a

fair value hierarchy that reflects the significance of the inputs used in the measurements,

according to the following levels:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the

asset or liability, either directly or indirectly.

Level 3 – inputs for the asset or liability that are not based on observable market data.

The tables below show the level in the fair value hierarchy into which fair value measurements

have been categorised:

2023

Assets as per the balance sheet

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Derivative financial instruments – 3.8 – 3.8

2023

Liabilities as per the balance sheet

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Derivative financial instruments – 37.4 – 37.4

2022

Assets as per the balance sheet

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Derivative financial instruments – 5.1 – 5.1

2022

Liabilities as per the balance sheet

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Derivative financial instruments – 25.5 – 25.5

There were no transfers between Levels 1, 2 and 3 fair value measurements during the current

or prior period.

The Level 2 fair values of derivative financial instruments have been obtained using a market

approach and reflect the estimated amount the Group would expect to pay or receive on

termination of the instruments, adjusted for the Group’s own credit risk. The Group utilises

valuations from counterparties who use a variety of assumptions based on market conditions

existing at each balance sheet date. The fair values are highly sensitive to the inputs to the

valuations, such as discount rates, analysis of credit risk and yield curves.

The fair values of all the Group’s other financial instruments are equal to their book values,

with the exception of borrowings (note 20). The carrying amount less impairment provision

offof finance lease receivables, trade receivables and other receivables, and the carrying

amount of other cash deposits, cash and cash equivalents, trade payables and other

payables, are assumed to approximate their fair values.

Notes continued

For the 52 weeks ended 30 September 2023

133Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

25 FINANCIAL INSTRUMENTS CONTINUED

Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including interest

raterrate risk and foreign currency risk), counterparty risk, credit risk and liquidity risk. The Group’s

overall risk management programme focuses on the unpredictability of financial markets

and seeks to minimise potential adverse effects on the Group’s financial performance.

TheGe Group uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by a central treasury department under policies approved

by the Board. The treasury department identifies, evaluates and hedges financial risks. The

Board sets principles for overall risk management, as well as policies covering specific areas,

such as interest rate risk, credit risk, investment of excess liquidity and use of derivative and

non-derivative financial instruments.

Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes

inmin market interest rates, and as such the Group’s interest rate risk arises from its borrowings.

Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings

issued at fixed rates expose the Group to fair value interest rate risk.

The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are

simulated taking into consideration refinancing, renewal of existing positions, alternative

financing, and hedging. Based on these scenarios, the Group calculates the impact on the

income statement of a defined interest rate shift. The scenarios are run only for liabilities that

represent the major interest-bearing positions.

The Group manages its cash flow interest rate risk by using floating-to-fixed interest rate

swaps. Such interest rate swaps have the economic effect of converting borrowings from

floating rates to fixed rates. Generally, the Group raises borrowings at floating rates and will

often swap them into fixed rates that are lower than those available if the Group borrowed

atfat fixed rates directly. Under the interest rate swaps, the Group agrees with other parties to

exchange, at specified intervals, the difference between fixed contract and floating rate

interest amounts calculated by reference to the agreed notional amounts.

If interest rates had been 0.5% higher/lower during the period ended 30 September 2023,

withaith all other variables held constant, the post-tax profit for the period would have been

£0.6m0.6 million (2022: £0.7 million) lower/higher as a result of higher/lower interest expense.

Interest rate swaps designated as part of a hedging relationship

The Group uses interest rate swaps to fix the interest rate payable on the floating rate tranches

of its securitised debt. The interest rate swap in respect of the A4 tranche of securitised debt

was designated as part of a hedging relationship in the current and prior period.

This interest rate swap has the same critical terms as the associated securitised debt including

reset dates, payment dates, maturities and notional amounts (note 21). The economic

relationship between the forecast floating rate interest payments and the interest rate swap is

determined and assessed through quantitative hedge effectiveness calculations performed at

each reporting date, and upon a significant change in the circumstances affecting the hedge

effectiveness requirements. As the interest rate swap has a notional amount profile the same as

that of the principal amount profile of the securitised debt on which the floating rate interest is

paid the hedge ratio is 1:1. Sources of ineffectiveness that might affect the hedging relationship

are the Group’s own credit risk, changes in the timing and amount of the interest payments

and the recouponing of the swap from a single fixed rate to a stepped profile.

The fixed rate of this interest rate swap at 30 September 2023 was 6.0% (2022: 6.0%).

Interest rate swaps designated as part of a hedging relationship

2023

£m

2022

£m

Carrying amount of hedging instruments (included within derivative

financial instruments) 5.4 5.3

Change in fair value of hedging instruments used as the basis for

recognising hedge ineffectiveness in the period 3.6 (22.6)

Nominal amount of hedging instruments 119.6 130.9

Change in fair value of hedged items used as the basis for recognising

hedge ineffectiveness in the period (3.0) 23.9

Hedging reserve balance in respect of continuing hedges (1.0) (0.3)

Hedging reserve balance in respect of discontinued hedges (43.4) (50.4)

Hedging (losses)/gains recognised in other comprehensive income (3.0) 23.9

Hedge ineffectiveness losses recognised in profit or loss (0.6) (1.3)

Amount reclassified from the hedging reserve to profit or loss in respect

ofcoof continuing hedges 2.1 6.2

Amount reclassified from the hedging reserve to profit or loss in respect

ofdof discontinued hedges 9.3 10.8

Notes continued

For the 52 weeks ended 30 September 2023

134 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

25 FINANCIAL INSTRUMENTS CONTINUED

Hedging reserve

2023

£m

2022

£m

At beginning of the period (50.7) (81.4)

Hedging (losses)/gains recognised in other comprehensive income (3.0) 23.9

Amount reclassified from the hedging reserve to profit or loss 11.4 17.0

Deferred tax on hedging reserve movements (2.1) (10.2)

At end of the period (44.4) (50.7)

Interest rate swaps not designated as part of a hedging relationship

On 22 March 2012 the Group entered into a forward starting interest rate swaps of £60.0 million

to fix the interest rate payable on the Group’s bank borrowings. The final termination date of

the swap is 30 June 2031 and it fixes interest at 4.0%. This swap has an early termination date

of2of 28 March 2024.

On 30 October 2017 the Group entered into a forward starting interest rate swap of £60.0 million

to fix the interest rate payable on the Group’s bank borrowings. This interest rate swap was

dueto fie to fix interest at 2.2% and commence on 30 April 2025. During the current period, the

commencement date was brought forward to 30 October 2022 and the rate at which interest

is fixed was increased to 3.5%. There is an early termination date of 1 November 2027. The final

termination date is 30 April 2029.

On 27 March 2019 the Group recouponed the interest rate swap that fixes the interest rate

payable on the floating rate elements of its A2, A3 and B securitised notes. As a result, the

hedging relationship between this interest rate swap and the associated debt ceased to meet

the qualifying criteria for hedge accounting. The cumulative hedging loss existing in equity at

27 March 2019 remained in equity and is being recognised when the forecast transactions are

ultimately recognised in the income statement. Fair value movements in respect of this interest

rate swap after 27 March 2019 are being recognised within the income statement.

The interest rate risk profile, after taking account of derivative financial instruments, is as follows:

2023 2022

Floating rate

financial

liabilities

£m

Fixed rate

financial

liabilities

£m

Total

£m

Floating rate

financial

liabilities

£m

Fixed rate

financial

liabilities

£m

Total

£m

Borrowings 480.7 1,144.3 1,625.0 531.7 1,121.1 1,652.8

The weighted average interest rate of the fixed rate borrowings was 5.1% (2022: 5.2%) and the

weighted average period for which the rate is fixed was 13 years (2022: 14 years).

Interest rate benchmark reform

A fundamental reform of major interest rate benchmarks has been undertaken globally,

including the replacement of some interbank offered rates (IBORs) with alternative nearly

risk-free rates (referred to as ‘IBOR reform’).

In the prior period the Group transitioned its borrowings and interest rate swaps (which were

indexed to LIBOR) to Sterling Overnight Index Average (SONIA) rates with a credit spread. The

Group applies the amendments to IFRS 9 ‘Financial Instruments’ to those financial instruments

and hedging relationships directly affected by IBOR reform. The Group accounted for the

change to SONIA using the practical expedient introduced by the Interest Rate Benchmark

Reform Phase 2 amendments, which allows the Group to change the basis for determining

the contractual cash flows prospectively by revising the effective interest rate.

Foreign currency risk

The Group buys and sells goods denominated in non-sterling currencies, principally US dollars

and euros. As a result, movements in exchange rates can affect the value of the Group’s

income and expenditure. The Group’s exposure in this area is not considered to be significant.

Counterparty risk

The Group’s counterparty risk in respect of its cash and cash equivalents and other cash

deposits is mitigated by the use of various banking institutions for its deposits. There is no

significant concentration of counterparty risk in respect of the Group’s pension assets, as

these are held with a range of institutions.

Notes continued

For the 52 weeks ended 30 September 2023

135Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

25 FINANCIAL INSTRUMENTS CONTINUED

Credit risk

Credit risk is managed on a Group basis. Credit risk arises from credit exposure to

customers,is, including outstanding receivables and committed transactions. If customers

areinre independently rated, these ratings are used. Otherwise, if there is no independent rating,

an assessment is made of the credit quality of the customer, taking into account its financial

position, past experience and other factors. Individual credit limits are set based on internal or

external ratings in accordance with limits set by the Board. The utilisation of and adherence to

credit limits is regularly monitored.

The financial assets of the Group which are subject to the expected credit loss model under

IFRS 9 ‘Financial Instruments’ comprise finance lease receivables, trade receivables and other

receivables. Other cash deposits and cash and cash equivalents are also subject to the

impairment requirements of IFRS 9 however the impairment loss is immaterial.

Finance lease receivables, trade receivables and other receivables have been grouped as

set out below for the purpose of calculating the expected credit losses:

Gross Loss allowance

2023

£m

2022

£m

2023

£m

2022

£m

Finance lease receivables

Net investment in the lease 18.8 23.5 2.1 3.8

18.8 23.5 2.1 3.8

Trade receivables

Amounts due from current pub tenants 1.7 2.7 0.2 0.4

Miscellaneous trade receivables 11.0 9.2 0.3 0.3

12.7 11.9 0.5 0.7

Other receivables

Amounts due from previous pub tenants 0.9 1.1 0.9 1.1

Amounts due from other property tenants 0.5 0.7 0.1 0.1

Miscellaneous other receivables 3.4 1.0 0.1 0.1

4.8 2.8 1.1 1.3

36.3 38.2 3.7 5.8

Expected credit losses have been calculated as follows:

Gross Loss allowance

2023

£m

2022

£m

2023

£m

2022

£m

12-month expected credit losses 3.4 1.0 0.1 0.1

Lifetime expected credit losses for trade and lease

receivables 32.9 37.2 3.6 5.7

36.3 38.2 3.7 5.8

Finance lease receivables

Finance lease receivables are lease receivables that result from transactions that are within the

scope of IFRS 16 ‘Leases’ and the loss allowance is calculated as the lifetime expected credit

losses. For tenants where it is considered that there is a significant risk of default the expected

credit losses are calculated on an individual basis taking into account the circumstances

involved. For all other tenants, after accounting for collateral held in the form of cash deposits

and the value of the leased asset itself, the remaining balance due is low and as such the

expected credit losses are minimal.

Amounts due from pub tenants

Amounts due from current pub tenants result almost entirely from transactions that are within

the scope of IFRS 15 ‘Revenue from Contracts with Customers’ or are lease receivables that

result from transactions that are within the scope of IFRS 16, and as such the loss allowance is

calculated as the lifetime expected credit losses. After accounting for collateral held in the

form of cash deposits the remaining balance due is low and as such the expected credit

losses are minimal.

Amounts due from previous pub tenants predominantly result from transactions that are

withintin the scope of IFRS 15 or are lease receivables that result from transactions that are

withintin the scope of IFRS 16 and as such the loss allowance is calculated as the lifetime

expected credit losses. The historical loss rate on closed accounts, adjusted to reflect current

and forward-looking information regarding macroeconomic factors affecting customers’

ability to pay, such as the cost-of-living crisis, is used to measure the expected credit losses

onton these receivables.

Notes continued

For the 52 weeks ended 30 September 2023

136 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

25 FINANCIAL INSTRUMENTS CONTINUED

Miscellaneous trade receivables

Miscellaneous trade receivables result almost entirely from transactions that are within the

scope of IFRS 15 and as such the loss allowance is calculated as the lifetime expected credit

losses. Due to the very low credit risk on the majority of these receivables the expected credit

losses are minimal.

Amounts due from other property tenants

Amounts due from other property tenants are almost entirely lease receivables that result

from transactions that are within the scope of IFRS 16 and as such the loss allowance is

calculated as the lifetime expected credit losses. For tenants where it is considered that there

is a significant risk of default the expected credit losses are calculated on an individual basis

taking into account the circumstances involved. For all other tenants, after accounting for

collateral held in the form of cash deposits, the remaining balance due is low and as such

the expected credit losses are minimal.

Miscellaneous other receivables

Miscellaneous other receivables do not generally result from transactions that are within the

scope of IFRS 15 and do not comprise lease receivables resulting from transactions that are

within the scope of IFRS 16. These receivables are considered to have low credit risk and as

such the loss allowance is calculated as the 12-month expected credit losses. Receivables

are considered to have low credit risk where there is a low risk of default and it is expected

that the debtor will be able to meet its payment obligations in the near future.

The movements in the loss allowances for finance lease receivables, trade receivables and

other receivables are as follows:

Finance lease receivables

2023

£m

2022

£m

At beginning of the period 3.8 3.9

Net (decrease)/increase in loss allowance recognised in profit or loss (1.1) 0.1

Amounts written off as uncollectible (0.6) (0.2)

At end of the period 2.1 3.8

Trade receivables

2023

£m

2022

£m

At beginning of the period 0.7 0.8

Net decrease in loss allowance recognised in profit or loss (0.1) (0.1)

Amounts written off as uncollectible (0.1) –

At end of the period 0.5 0.7

12-month expected

credit losses

Lifetime expected

creditlt losses

Other receivables

2023

£m

2022

£m

2023

£m

2022

£m

At beginning of the period 0.1 0.1 1.2 8.3

Net increase in loss allowance recognised in profit

or loss – – 0.2 0.1

Amounts written off as uncollectible – – (0.4) (7.2)

At end of the period 0.1 0.1 1.0 1.2

The Group has no significant concentration of credit risk in respect of its customers.

Themae maximum exposure to credit risk at the reporting date is the carrying value of each

classof reces of receivable.

Liquidity risk

The Group applies a prudent liquidity risk management policy, which involves maintaining

sufficient cash, ensuring the availability of funding through an adequate amount of committed

credit facilities and having the ability to close out market positions. Due to the dynamic nature

of the underlying business, the Group maintains the availability of committed credit lines to

ensure that it has flexibility in funding.

Management monitor rolling forecasts of the Group’s liquidity reserve (comprising undrawn

borrowing facilities and cash and cash equivalents) on the basis of expected cash flow.

InaIn addition, the Group’s liquidity management policy involves maintaining debt financing

plans, projecting cash flows and considering the level of liquid assets necessary to meet

these, and monitoring balance sheet liquidity ratios against internal and external regulatory

requirements. The Group’s borrowing covenants are subject to regular review.

The tables below analyse the Group’s financial liabilities and non-settled derivative financial

instruments into relevant maturity groupings based on the remaining period at the balance

sheet date to the contractual maturity date. The amounts disclosed in the tables are the

contractual undiscounted cash flows.

Notes continued

For the 52 weeks ended 30 September 2023

137Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

25 FINANCIAL INSTRUMENTS CONTINUED

At 30 September 2023

Less than

1yea1 year

£m

Between

1an1 and 2 years

£m

Between

2an2 and 5 years

£m

Over

5 years

£m

Total

£m

Borrowings 179.2 405.8 379.6 1,835.0 2,799.6

Derivative financial instruments (7.2) (0.2) 7.4 75.0 75.0

Trade payables 66.3 – – – 66.3

Other payables 12.9 – – – 12.9

251.2 405.6 387.0 1,910.0 2,953.8

At 1 October 2022

Less than

1yea1 year

£m

Between

1an1 and 2 years

£m

Between

2an2 and 5 years

£m

Over

5 years

£m

Total

£m

Borrowings 163.6 357.0 420.7 1,917.3 2,858.6

Derivative financial instruments (9.4) (7.7) 2.8 84.4 70.1

Trade payables 95.5 – – – 95.5

Other payables 12.5 – – – 12.5

262.2 349.3 423.5 2,001.7 3,036.7

26 SUBSIDIARY UNDERTAKINGS

Details of the Group’s subsidiary undertakings are provided in note 6 to the Company

financial statements.

27 SHARE-BASED PAYMENTS

During the period there were three classes of equity-settled employee share incentive

plansplans outstanding:

(a) Save As You Earn (SAYE). Under this scheme employees enter into a savings contract for a

period of three to five years and options are granted on commencement of the contract,

exercisable using the amount saved under the contract at the time it terminates. Options

under the scheme are granted at a discount to the average quoted market price of the

Company’s shares at the time of the invitation and are not subject to performance

conditions. Exercise of options is subject to continued employment.

(b) Deferred bonus. Under this scheme nil cost options are granted to eligible employees in lieu

of a cash bonus. Exercise of options is subject to a period of continued employment and

required no later than the tenth anniversary of the date of grant.

onlyvely vest provided the participant satisfies the minimum shareholding requirement and

performance conditions relating to earnings per share, cash flow, return on capital, profit

before tax and relative total shareholder return are met. LTIP options are exercisable no later

than the tenth anniversary of the date of grant.

In 2010, HM Revenue & Customs (HMRC) approved an Approved Performance Share Plan

(APSP) to enable participants in the LTIP to benefit from UK tax efficiencies. As such, awards

made in 2010 and subsequent years may comprise an HMRC approved option (in respect

ofthof the first £30,000 worth of an award) and an unapproved LTIP award for amounts in

excessof tss of this HMRC limit. A further share award (a linked award) is also provided to enable

participants to fund the exercise of the approved option. This linked award is satisfied by

way of shares held on trust, but these additional shares are not generally delivered to the

participant. Under these rules the LTIP options are still issued at nil cost to the employee.

The tables below summarise the outstanding share options:

Number of shares

Weighted average

exercise price

SAYE:

2023

2022

2023

2022

Outstanding at beginning of the period 7.9 1.5 46.7 92.4

Granted 10.4 7.6 26.0 44.0

Expired (5.6) (1.2) 46.9 85.3

Outstanding at end of the period 12.7 7.9 29.6 46.7

Exercisable at end of the period – 0.4 96.0 97.2

Range of exercise prices

26.0p to

96.0p

44.0p to

110.0p

Weighted average remaining contractual life (years) 3.2 3.3

Number of shares

Weighted average

exercise price

Deferred bonus:

2023

2022

2023

2022

Outstanding at beginning of the period 0.3 0.4 – –

Exercised – (0.1) – –

Outstanding at end of the period 0.3 0.3 – –

Exercisable at end of the period – – – –

Number of shares

Weighted average

exercise price

LTIP:

2023

2022

2023

2022

Outstanding at beginning of the period 9.2 7.6 – –

Granted 10.3 4.6 – –

Exercised (0.2) (0.1) – –

Expired (2.4) (2.9) – –

Outstanding at end of the period 16.9 9.2 – –

Exercisable at end of the period – – – –

Notes continued

For the 52 weeks ended 30 September 2023

138 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

27 SHARE-BASED PAYMENTS CONTINUED

The fair values of the SAYE, deferred bonus and LTIP rights are calculated at the date of grant

using the Black-Scholes option-pricing model. The significant inputs into the model for all

schemes unless otherwise stated were:

2023 2022

Dividend yield % 1.9 to 4.7 2.1 to 2.2

Expected volatility % 40.4 to 48.1 36.1 to 45.6

Risk-free interest rate % 3.3 to 5.1 0.5 to 2.0

Expected life of rights

SAYE 3 years 3 years

Deferred bonus N/A N/A

LTIP 3 to 5 years 5 years

The expected volatility is based on historical volatility over the expected life of the rights.

The fair value of options granted during the current period in relation to the SAYE was 6.5p

(2022: 12.2p). No options were granted in the current period or prior period in relation to the

deferred bonus scheme. The weighted average fair value of options granted during the

period in relation to the LTIP was 31.8p (2022: 64.5p).

The weighted average share price for options exercised over the period was 32.6p (2022:

67.8p). The total charge for the period relating to employee share-based payment plans was

£0.4 million (2022: £0.5 million), all of which related to equity-settled share-based payment

transactions. After tax, the total charge was £0.3 million (2022: £0.5 million).

28 EQUITY SHARE CAPITAL

2023 2022

Allotted, called up and fully paid

Number

Value

£m

Number

Value

£m

Ordinary shares of 7.375p each:

At beginning and end of the period 660.4 48.7 660.4 48.7

29 OTHER COMPONENTS OF EQUITY

The capital redemption reserve of £6.8 million (2022: £6.8 million) arose on share buybacks.

Own shares represent the carrying value of the investment in treasury shares and shares held

on trust for employee share schemes (including executive share option schemes) as set out in

the table below. The trustees of the schemes are Banks’s Brewery Insurance Limited, a

wholly-owned subsidiary of Marston’s PLC, and Computershare Trustees (C.I.) Limited.

2023 2022

Number

Value

£m

Number

Value

£m

Shares held on trust for employee share schemes 0.7 0.8 0.9 1.1

Treasury shares 26.2 109.8 26.2 109.8

26.9 110.6 27.1 110.9

The market value of own shares held is £8.2 million (2022: £9.7 million). Shares held on trust

forefor employee share schemes represent 0.1% (2022: 0.1%) of issued share capital. Treasury

shares held represent 4.0% (2022: 4.0%) of issued share capital. Dividends on own shares

havebeeve been waived.

The Group considers its capital to comprise total equity (as disclosed on the face of the

Group balance sheet) and net debt (note 30). In managing its capital the primary objectives

are to ensure that the Group is able to continue to operate as a going concern and to

maximise return to shareholders through a combination of capital growth and distributions.

The Group seeks to maintain a ratio of debt to equity that both balances risks and returns at

an acceptable level and retains sufficient funds to comply with lending covenants, achieve

working capital targets and meet investment requirements. The Board reviews the Group’s

dividend policy and funding requirements at least once a year.

Notes continued

For the 52 weeks ended 30 September 2023

139Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

30 NET DEBT

Analysis of net debt

2023

£m

2022

£m

Cash and cash equivalents

Cash at bank and in hand 26.5 27.7

26.5 27.7

Financial assets

Other cash deposits 3.1 3.0

3.1 3.0

Debt due within one year

Bank borrowings 2.6 0.7

Securitised debt (41.1) (39.0)

Lease liabilities (17.8) (11.2)

Other lease related borrowings 0.4 0.4

Other borrowings (10.0) (15.0)

(65.9) (64.1)

Debt due after one year

Bank borrowings (228.2) (214.6)

Securitised debt (560.2) (601.3)

Lease liabilities (362.6) (366.6)

Other lease related borrowings (338.4) (338.0)

Other borrowings (40.0) (40.0)

Preference shares (0.1) (0.1)

(1,529.5) (1,560.6)

Net debt (1,565.8) (1,594.0)

Other cash deposits comprises deposits securing letters of credit for reinsurance contracts.

Included within cash and cash equivalents is an amount of £5.6 million (2022: £5.6 million)

relating to collateral held in the form of cash deposits. These amounts are both considered

tobe reto be restricted cash. In addition, any other cash held in connection with the securitised

business is governed by certain restrictions under the covenants associated with the

securitisation (note 21).

Reconciliation of net cash flow to movement in net debt

2023

£m

2022

£m

Decrease in cash and cash equivalents in the period (1.2) (4.5)

Increase/(decrease) in other cash deposits 0.1 (0.2)

Cash outflow from movement in debt 35.5 30.9

Net cash inflow 34.4 26.2

Non-cash movements and deferred issue costs (6.2) (16.3)

Movement in net debt in the period 28.2 9.9

Net debt at beginning of the period (1,594.0) (1,603.9)

Net debt at end of the period (1,565.8) (1,594.0)

2023

£m

2022

£m

Net debt excluding lease liabilities (1,185.4) (1,216.2)

Lease liabilities (380.4) (377.8)

Net debt (1,565.8) (1,594.0)

Changes in liabilities arising from financing activities are as follows:

2023 2022

Borrowings

£m

Derivative

financial

instruments

£m

Total

financing

liabilities

£m

Borrowings

£m

Derivative

financial

instruments

£m

Total

financing

liabilities

£m

At beginning of the period (1,624.7) (20.4) (1,645.1) (1,639.3) (170.5) (1,809.8)

Cash flow 35.5 (0.1) 35.4 30.9 16.3 47.2

Changes in fair value – (13.1) (13.1) – 133.8 133.8

Other changes (6.2) – (6.2) (16.3) – (16.3)

At end of the period (1,595.4) (33.6) (1,629.0) (1,624.7) (20.4) (1,645.1)

Notes continued

For the 52 weeks ended 30 September 2023

140 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

31 WORKING CAPITAL AND NON-CASH MOVEMENTS

Working capital movement

2023

£m

2022

£m

(Increase)/decrease in inventories (2.3) 0.3

Decrease/(increase) in trade and other receivables 4.7 (7.4)

Decrease in trade and other payables (31.4) (24.7)

(29.0) (31.8)

Non-cash movements

2023

£m

2022

£m

Movements in respect of property, plant and equipment, assets held for

sale and intangible assets 23.0 (24.6)

Income from associates (9.9) (3.3)

Non-cash movements in respect of leases (1.2) (3.0)

Share-based payments 0.4 0.5

12.3 (30.4)

Further details of movements in respect of intangible assets, property, plant and equipment

and assets held for sale are given in notes 10, 11 and 19.

32 LEASES

The Group as lessee

The Group leases a number of its properties. Right-of-use assets in respect of leasehold

landand and buildings with a term exceeding 100 years at acquisition/commencement of the

lease or where there is an option to purchase the freehold at the end of the lease term for a

nominal amount are classed as effective freehold land and buildings within property, plant

and equipment. Right-of-use assets in respect of any other leasehold land and buildings are

classed as leasehold land and buildings within property, plant and equipment. The Group’s

property leases have various terms, escalation clauses and renewal rights. A number of the

leases include variable payments that depend on changes in RPI, often subject to a cap

andcold collar.

The Group also leases certain items of fixtures, fittings, tools and equipment. These are

generally held under leases with terms of five years or less and in some cases contain an

option to purchase the asset for a nominal amount at the end of the lease.

Depreciation charge for right-of-use assets

2023

£m

2022

£m

Leasehold land and buildings 11.6 12.1

Fixtures, fittings, tools and equipment 0.2 0.2

11.8 12.3

Carrying amount of right-of-use assets

2023

£m

2022

£m

Effective freehold land and buildings 110.4 112.5

Leasehold land and buildings 245.6 254.0

Fixtures, fittings, tools and equipment 0.6 0.7

356.6 367.2

2023

£m

2022

£m

Interest expense on lease liabilities 19.3 18.9

Expenses relating to short-term leases 0.7 0.7

Expenses relating to leases of low-value assets, excluding short-term leases

of low-value assets 0.5 0.5

Variable lease payments 0.2 0.1

Income from subleasing right-of-use assets 1.3 1.4

Total cash outflow for leases 22.5 24.4

Additions to right-of-use assets 7.0 9.5

The table below analyses the Group’s lease liabilities into relevant maturity groupings

basedosed on the remaining period at the balance sheet date to the contractual maturity date.

The amounts disclosed in the table are the contractual undiscounted cash flows.

2023

£m

2022

£m

Less than one year 36.8 30.4

Between one and two years 29.0 28.9

Between two and five years 86.5 85.5

Over five years 562.1 576.8

714.4 721.6

Notes continued

For the 52 weeks ended 30 September 2023

141Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

32 LEASES CONTINUED

The Group as lessor

The Group leases a proportion of its licensed estate and other unlicensed properties to tenants.

The majority of lease agreements have terms of 21 years or less. For leases where the Group is

the intermediate lessor certain subleases are classified as finance leases as the classification is

determined by reference to the right-of-use asset arising from the head lease rather than the

underlying asset. All other leases are classified as operating leases from a lessor perspective.

Amounts recognised in the income statement are as follows:

2023

£m

2022

£m

Finance income on the net investment in the lease 0.9 0.9

Lease income for operating leases 9.6 11.3

The maturity analysis of the undiscounted lease payments to be received for finance leases

isais as follows:

Finance leases

2023

£m

2022

£m

Within one year 4.7 6.6

In more than one year but less than two years 2.3 2.8

In more than two years but less than three years 2.1 2.6

In more than three years but less than four years 2.0 2.4

In more than four years but less than five years 2.0 2.3

In more than five years 11.3 13.8

24.4 30.5

Unearned finance income (5.6) (7.0)

Net investment in the lease 18.8 23.5

The maturity analysis of the undiscounted lease payments to be received for operating

leases is as follows:

Operating leases

2023

£m

2022

£m

Within one year 7.8 9.8

In more than one year but less than two years 5.9 7.6

In more than two years but less than three years 4.6 5.7

In more than three years but less than four years 3.1 4.4

In more than four years but less than five years 2.3 2.8

In more than five years 9.3 11.1

33.0 41.4

33 CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS

The Group has issued letters of credit totalling £3.7 million (2022: £3.7 million) to secure

reinsurance contracts; of which some of these letters of credit are secured on fixed deposits

(note 30).

The Group has also entered into a Deed of Guarantee with the Trustees of the Marston’s PLC

Pension and Life Assurance Scheme (‘the Scheme’) whereby it guarantees to the Trustees the

ongoing obligations of the Group to contribute to the Scheme, and the obligations of the

Group to contribute to the Scheme in the event of a debt becoming due under section 75 of

the Pensions Act 1995 on the occurrence of either a Group company entering liquidation or

the Scheme winding up.

Notes continued

For the 52 weeks ended 30 September 2023

142 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Note

30 September

2023

£m

1 October

2022

£m

Fixed assets

Tangible assets 5 194.0 204.9

Investments 6 264.2 263.8

458.2 468.7

Current assets

Debtors

Amounts falling due within one year 7 257.3 255.7

Amounts falling due after more than one year 7 668.3 592.2

Cash at bank 1.9 2.2

927.5 850.1

Creditors Amounts falling due within one year 8 (550.4) (475.6)

Net current assets 377.1 374.5

Total assets less current liabilities 835.3 843.2

Creditors Amounts falling due after more than one year 8 (155.5) (159.1)

Provisions for liabilities 9 (5.2) (4.7)

Net assets 674.6 679.4

Capital and reserves

Equity share capital 13 48.7 48.7

Share premium account 14 334.0 334.0

Revaluation reserve 14 21.6 25.4

Capital redemption reserve 14 6.8 6.8

Own shares 14 (110.6) (110.9)

Profit and loss reserves 374.1 375.4

Total equity 674.6 679.4

The loss of the Company for the 52 weeks ended 30 September 2023 was £1.6 million (2022: profit of £29.8 million).

The financial statements were approved by the Board and authorised for issue on 5 December 2023 and are signed on its behalf by:

Hayleigh Lupino

Chief Financial Officer

5 December 2023

Company registration number: 31461

Company balance sheet

As at 30 September 2023

143Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Equity share

capital

£m

Share premium

account

£m

Revaluation

reserve

£m

Capital redemption

reserve

£m

Own

£m

Profit and loss

reserves

£m

Total

equity

£m

At 3 October 2021 48.7 334.0 19.5 6.8 (111.1) 344.2 642.1

Profit for the period – – – – – 29.8 29.8

Revaluation of properties – – 8.9 – – – 8.9

Deferred tax on properties – – (1.9) – – – (1.9)

Total comprehensive income – – 7.0 – – 29.8 36.8

Share-based payments – – – – – 0.5 0.5

Sale of own shares – – – – 0.2 (0.2) –

Transfer to profit and loss reserves – – (1.1) – – 1.1 –

Total transactions with owners – – (1.1) – 0.2 1.4 0.5

At 1 October 2022 48.7 334.0 25.4 6.8 (110.9) 375.4 679.4

Loss for the period – – – – – (1.6) (1.6)

Revaluation of properties – – (4.2) – – – (4.2)

Deferred tax on properties – – 0.6 – – – 0.6

Total comprehensive expense – – (3.6) – – (1.6) (5.2)

Share-based payments – – – – – 0.4 0.4

Sale of own shares – – – – 0.3 (0.3) –

Transfer to profit and loss reserves – – (0.2) – – 0.2 –

Total transactions with owners – – (0.2) – 0.3 0.3 0.4

At 30 September 2023 48.7 334.0 21.6 6.8 (110.6) 374.1 674.6

Company statement of changes in equity

For the 52 weeks ended 30 September 2023

144 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES

The Company’s principal accounting policies are set out below:

Company information

Marston’s PLC is a public company limited by shares incorporated in England and Wales and

domiciled in the UK. The registered office is St Johns House, St Johns Square, Wolverhampton,

WV2 4BH.

Basis of preparation

These financial statements have been prepared in accordance with FRS 102 ‘The Financial

Reporting Standard applicable in the UK and Republic of Ireland’ (FRS 102) and the

requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the

Company. Monetary amounts in these financial statements are rounded to the nearest

£0.1million.

The financial statements have been prepared under the historical cost convention modified

to include the revaluation of effective freehold land and buildings and the holding of certain

financial instruments at fair value.

The Company is a qualifying entity for the purposes of FRS 102, as it prepares publicly

available consolidated financial statements, which are intended to give a true and fair view

of the assets, liabilities, financial position and profit or loss of the Group. The Company has

therefore taken advantage of the exemptions from the following disclosure requirements in

FRS 102:

• Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flows and

related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ – Interest income/expense and net gains/losses

for each category of financial instrument not measured at fair value through profit or

loss, impairment losses for each class of financial asset and information that enables

users to evaluate the significance of financial instruments;

• Section 26 ‘Share-based Payment’ – Reconciliation of the opening and closing number

and weighted average exercise price of share options, how the fair value of options

granted was measured, and an explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.

These financial statements present information about the Company as an individual entity

and not about its group.

As permitted by section 408(3) of the Companies Act 2006, no profit and loss account has

been presented for the Company.

The Directors continue to adopt the going concern basis of accounting in preparing the

financial statements. Details of the going concern assessment performed by the Group are

provided in note 1 to the Group financial statements.

Turnover

Turnover represents rent receivable, which is recognised over time and in the period to which

it relates.

Current and deferred tax

The tax currently payable is based on taxable profit for the period. Taxable profit differs from

net profit as reported in the accounts because it excludes items of income or expense that

are taxable or deductible in other periods and it further excludes items that are never

taxable or deductible. The Company’s liability for current tax is calculated using tax rates that

have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax

assets are recognised to the extent that it is probable that they will be recovered against the

reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are

not recognised if the timing difference arises from goodwill or from the initial recognition of

other assets and liabilities in a transaction that affects neither the tax profit nor the

accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and

reduced to the extent that it is no longer probable that sufficient taxable profits will be

available to allow all or part of the asset to be recovered. Deferred tax is calculated at the

tax rates that are expected to apply in the period when the liability is settled or the asset is

realised. Deferred tax is charged or credited to profit or loss, except when it relates to items

charged or credited directly to equity, in which case the deferred tax is also dealt with in

equity. Deferred tax assets and liabilities are offset when the Company has a legally

enforceable right to offset current tax assets and liabilities and the deferred tax assets and

liabilities relate to taxes levied by the same tax authority.

Notes

For the 52 weeks ended 30 September 2023

145Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

Fixed assets

• Land and buildings which are either freehold or are in substance freehold assets are

classed as effective freehold land and buildings. This includes leasehold land and

buildings with a term exceeding 100 years at acquisition/commencement of the lease

orwhere there is an option to purchase the freehold at the end of the lease term for a

nominal amount. All other leasehold land and buildings are classed as leasehold land

and buildings.

• Effective freehold land and buildings are initially stated at cost and subsequently at

valuation. Leasehold land and buildings and fixtures, fittings, plant and equipment are

stated at cost.

• Depreciation is charged to the profit and loss account on a straight-line basis to provide

for the cost or valuation of the assets less their residual values over their useful lives.

• Land and buildings are depreciated to their residual values over the lower of the lease

term (where applicable) and 50 years.

• Fixtures, fittings, plant and equipment are depreciated over seven years.

• Interest costs directly attributable to capital projects are capitalised.

Effective freehold land and buildings are revalued by qualified valuers on an annual basis

using open market values so that the carrying value of an asset does not differ significantly

from its fair value at the balance sheet date. The annual valuations are determined via

third-party inspection of approximately a third of the sites such that all sites are individually

inspected every three years. Substantially all of the Company’s effective freehold land and

buildings have been valued by a third-party in accordance with the Royal Institution of

Chartered Surveyors’ Red Book. These valuations are performed directly by reference to

observable prices in an active market or recent market transactions on arm’s length terms.

Internal valuations are performed on the same basis.

When a valuation is below current carrying value, the asset concerned is reviewed for

impairment. Impairment losses are charged to the revaluation reserve to the extent that a

previous gain has been recorded, and thereafter to the profit and loss account. Surpluses on

revaluation are recognised in the revaluation reserve, except to the extent they reverse

previously charged impairment losses, in which case the reversal is recorded in the profit

andloss account.

Disposals of fixed assets

Profit/loss on disposal of fixed assets represents net sale proceeds less the carrying value of

the assets. Any element of the revaluation reserve relating to the fixed assets disposed of is

transferred to profit and loss reserves at the date of sale.

Financial instruments

The Company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’

and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the balance sheet when the Company becomes

party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial

statements, when there is a legally enforceable right to set off the recognised amounts and

there is an intention to settle on a net basis or to realise the asset and settle the liability

simultaneously.

Basic financial assets

Basic financial assets, which comprise amounts owed by Group undertakings, other debtors

and cash and cash equivalents, are initially measured at the transaction price including

transaction costs and are subsequently carried at amortised cost using the effective

interestmethod.

Other financial assets

Derivatives, including interest rate swaps, are not basic financial assets and are accounted

for as set out below.

Financial assets, other than those held at fair value through profit or loss, are assessed for

indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or

more events that occurred after the initial recognition of the financial asset, the estimated

future cash flows have been affected. If an asset is impaired, the impairment loss is the

difference between the carrying amount and the present value of the estimated cash flows

discounted at the asset’s original effective interest rate. The impairment loss is recognised in

profit or loss.

Notes continued

For the 52 weeks ended 30 September 2023

146 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

If there is a decrease in the impairment loss arising from an event occurring after the

impairment was recognised, the impairment is reversed. The reversal is such that the

currentcarrying amount does not exceed what the carrying amount would have been,

hadthe impairment not previously been recognised. The impairment reversal is recognised

inprofit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the

asset expire or are settled, or when the Company transfers the financial asset and

substantially all the risks and rewards of ownership to another entity.

Financial liabilities and equity instruments are classified according to the substance of the

contractual arrangements entered into. An equity instrument is any contract that evidences

a residual interest in the assets of the Company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, comprising amounts owed to Group undertakings, other creditors

and borrowings, are initially recognised at the transaction price and subsequently carried at

amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps, are not basic financial liabilities and are accounted

for as set out below.

Financial liabilities are derecognised when the Company’s contractual obligations expire or

are discharged or cancelled.

Derivatives

The Company uses derivative financial instruments to hedge the Group’s exposure to

fluctuations in interest rates. Derivative financial instruments are initially recognised in the

balance sheet at fair value and are subsequently remeasured to their fair value at each

balance sheet date. The Company has not designated any derivative financial instruments

as hedging instruments and as such any gains or losses on remeasurement are recognised in

the profit and loss account immediately.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative

with a negative fair value is recognised as a financial liability.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer

substantiallyall the risks and rewards of ownership to the lessee. All other leases are

classifiedas operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets’ fair value

at the date of inception of the lease and the present value of the minimum lease payments.

The related liability is included in the balance sheet as a finance lease obligation. Lease

payments are treated as consisting of capital and interest elements. The interest is charged to

the profit and loss account so as to produce a constant periodic rate of interest on the

remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are

charged to the profit and loss account on a straight-line basis over the term of the relevant

lease except where another more systematic basis is more representative of the time pattern

in which economic benefits from the leased asset are consumed.

Lease premiums received are recognised on a straight-line basis over the life of the lease.

Obligations arising from sale and leaseback arrangements with repurchase options that do

not fall within the scope of Section 20 ‘Leases’ of FRS 102 are classified as other lease related

borrowings and accounted for as secured loans on an amortised cost basis.

Investments in subsidiaries

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less

any accumulated impairment losses. The investments are assessed for impairment at each

reporting date and any impairment losses or reversals of impairment losses are recognised

immediately in profit or loss.

Provisions

Provisions are recognised in the balance sheet when the Company has a present legal or

constructive obligation as a result of a past event and it is probable that an outflow of

economic benefits will be required to settle the obligation.

The amount recognised as a provision is the best estimate of the consideration required to

settle the present obligation at the balance sheet date, taking into account the risks and

uncertainties surrounding the obligation.

Notes continued

For the 52 weeks ended 30 September 2023

147Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

1 ACCOUNTING POLICIES CONTINUED

Where the effect of the time value of money is material, the amount expected to be required

to settle the obligation is recognised at present value, using a pre-tax rate that reflects current

market assessments of the time value of money and the risks specific to the obligation for which

the estimates of future cash flows have not been adjusted. When a provision is measured at

present value the unwinding of the discount is recognised as a finance cost in profit or loss in

the period it arises.

Dividends

Dividends proposed by the Board but unpaid at the period end are recognised in the

financial statements when they have been approved by the shareholders. Interim dividends

are recognised when paid.

Preference shares

Preference shares are treated as borrowings, and dividends payable on those preference

shares are charged as interest in the profit and loss account.

Group undertakings

There is an intra group funding agreement in place between the Company and certain other

members of the Group. This agreement stipulates that all balances outstanding on any

intercompany loan account between these companies which exceed £1 are interest

bearing at a prescribed rate.

There is a 12.5% subordinated loan owed to the Company by Marston’s Pubs Limited and

there are deep discount bonds owed by the Company to Banks’s Brewery Insurance Limited.

No interest is payable on any other amounts owed by/to Group companies who are not

party to the intra group funding agreement.

All amounts owed by/to Group undertakings are unsecured and, with the exception of the

subordinated loan and deep discount bonds, repayable on demand.

2 JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, the Directors are required to make

judgements, estimates and assumptions about the carrying amounts of assets and liabilities

that are not readily apparent from other sources. The estimates and associated assumptions

are based on historical experience and other factors that are considered to be relevant.

Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised where the

revision affects only that period, or in the period of the revision and future periods where the

revision affects both current and future periods.

The following estimates and assumptions have a significant risk of causing a material

adjustment to the carrying amounts of assets and liabilities:

Tangible fixed assets

The Company carries its effective freehold land and buildings at fair value. These properties

are valued by external or internal valuers on an open market value basis, primarily using

earnings multiples derived from prices in observed transactions involving comparable

businesses. The estimation of the fair values requires a combination of assumptions, including

future earnings and appropriate multiples.

The carrying amount of tangible fixed assets is shown in note 5.

Fixed asset investments

Where there are indications of impairment or reversal of impairment of the Company’s

investments in subsidiary undertakings an assessment is made of the recoverable amounts

ofthe investments, which are based on either the net assets of the subsidiary or value in

usecalculations. The estimation of the recoverable amounts requires a combination of

assumptions, including cash flows, long-term growth rates and pre-tax discount rates.

The carrying amount of fixed asset investments is shown in note 6.

3 AUDITOR’S REMUNERATION

Fees payable to the Company’s Auditor for the audit of the Company’s annual accounts are

disclosed in note 3 to the Group financial statements. Fees paid to the Company’s Auditor for

non-audit services to the Company itself are not required to be disclosed as the Group

financial statements disclose such fees on a consolidated basis.

Notes continued

For the 52 weeks ended 30 September 2023

148 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

4 EMPLOYEES

The average monthly number of people employed by the Company during the period was

nil (2022: nil).

5 TANGIBLE FIXED ASSETS

Effective

freehold

land and

buildings

£m

Leasehold

land and

buildings

£m

Fixtures,

fittings,

plant and

equipment

£m

Total

£m

Cost or valuation

At 2 October 2022 192.7 31.2 1.2 225.1

Additions 3.9 1.0 – 4.9

Revaluation (11.5) – – (11.5)

Disposals (1.0) (5.0) – (6.0)

At 30 September 2023 184.1 27.2 1.2 212.5

Depreciation

At 2 October 2022 – 19.7 0.5 20.2

Charge for the period – 0.9 0.2 1.1

Impairment – 1.9 – 1.9

Disposals – (4.7) – (4.7)

At 30 September 2023 – 17.8 0.7 18.5

Net book amount at 1 October 2022 192.7 11.5 0.7 204.9

Net book amount at 30 September 2023 184.1 9.4 0.5 194.0

The net book amount of land and buildings is split as follows:

2023

£m

2022

£m

Freehold land and buildings 135.1 138.6

Leasehold land and buildings with a term greater than 100 years at

acquisition/commencement 49.0 54.1

Leasehold land and buildings with a term less than 100 years at

acquisition/commencement 9.4 11.5

193.5 204.2

If the effective freehold land and buildings had not been revalued, the historical cost net

book amount would be £155.2 million (2022: £159.4 million).

Capital expenditure authorised and committed at the period end but not provided for in the

financial statements was £nil (2022: £0.3 million).

The net book amount of effective freehold land and buildings held under finance leases at

30 September 2023 was £16.5 million (2022: £19.1 million). The net book amount of effective

freehold land and buildings held as part of sale and leaseback arrangements that do not fall

within the scope of Section 20 ‘Leases’ of FRS 102 was £86.5 million (2022: £92.6 million). The

net book amount of fixtures, fittings, plant and equipment held under finance leases was £0.5

million (2022: £0.7 million).

The Company has charged effective freehold land and buildings with a value of £4.2 million

(2022: £4.1 million) in favour of the Marston’s PLC Pension and Life Assurance Scheme (the

‘Scheme’) as continuing security for the Group’s obligations to the Scheme.

Revaluation/impairment

At 2 July 2023 independent chartered surveyors revalued the Company’s effective freehold

properties on an open market value basis. During the current and prior period various

properties were also reviewed for impairment and/or material changes in value. These

valuation adjustments were recognised in the revaluation reserve or profit and loss account

as appropriate.

2023

£m

2022

£m

Profit and loss account:

Impairment (16.2) (5.2)

Reversal of past impairment 7.0 12.8

(9.2) 7.6

Revaluation reserve:

Unrealised revaluation surplus 5.1 10.0

Reversal of past revaluation surplus (9.3) (1.1)

(4.2) 8.9

Net (decrease)/increase in shareholders’ equity/tangible fixed assets (13.4) 16.5

Notes continued

For the 52 weeks ended 30 September 2023

149Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

6 FIXED ASSET INVESTMENTS

Subsidiary

undertakings

£m

Cost

At 2 October 2022 263.8

Capital contribution in respect of equity-settled share-based payments 0.4

At 30 September 2023 264.2

Net book amount at 1 October 2022 263.8

Net book amount at 30 September 2023 264.2

Where there are indications of impairment or reversal of impairment of the Company’s

investments in subsidiary undertakings an assessment is made of the recoverable amounts

ofthe investments, which are based on either the net assets of the subsidiary or value in use

calculations. Where a value in use calculation is used, cash flows have been derived from the

latest board approved cash flows of the relevant entity, applying a long-term growth rate of

1.8% and discounted at a pre-tax discount rate equivalent to 9.2%.

These financial statements are separate company financial statements for Marston’s PLC.

The registered office of all of the Company’s subsidiaries is St Johns House, St Johns Square,

Wolverhampton, WV2 4BH, with the exception of Banks’s Brewery Insurance Limited, Marston’s

Issuer PLC and Marston’s Issuer Parent Limited. The registered office of Banks’s Brewery

Insurance Limited is PO Box 33, Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 4AT.

The registered office of Marston’s Issuer PLC and Marston’s Issuer Parent Limited is Wilmington

Trust SP Services (London) Limited, Third Floor, 1 King’s Arms Yard, London, EC2R 7AF.

All subsidiaries have been included in the consolidated financial statements. Although the

Group does not hold any shares in Marston’s Issuer PLC and its parent company, Marston’s

Issuer Parent Limited, these companies are treated as subsidiary undertakings for the purpose

of the consolidated financial statements as it is considered that they are controlled by the

Group. Marston’s Issuer PLC was set up with the sole purpose of issuing debt secured on the

assets of Marston’s Pubs Limited. Wilmington Trust SP Services (London) Limited holds the

shares of Marston’s Issuer Parent Limited under a declaration of trust for charitable purposes.

The Company had the following subsidiary undertakings at 30 September 2023:

Nature of business Class of share

Proportion

of shares

held

directly by

Marston’s

PLC

Proportion

of shares

held by

the Group

Marston’s Estates Limited Property management Ordinary 25p – 100%

Marston’s Operating Limited Pub retailer Ordinary £1 – 100%

Marston’s Pubs Limited Pub retailer Ordinary £1 – 100%

Marston’s Pubs Parent Limited Holding company Ordinary £1 – 100%

Marston’s Telecoms Limited Telecommunications Ordinary £1 – 100%

Marston’s Trading Limited Pub retailer Ordinary £5 – 100%

Banks’s Brewery Insurance Limited Insurance Ordinary £1 – 100%

Marston’s Acquisitions Limited Acquisition company Ordinary 25p – 100%

Preference £1 – 100%

Marston’s Corporate Holdings

Limited

Holding company Ordinary £1 100% 100%

Marston’s Issuer PLC Financing company Ordinary £1 – –

Marston’s Issuer Parent Limited Holding company Ordinary £1 – –

Brasserie Restaurants Limited Dormant Ordinary £1 – 100%

Celtic Inns Holdings Limited Dormant Ordinary 1p – 100%

Celtic Inns Limited Dormant Ordinary £1 – 100%

Eldridge, Pope & Co., Limited Dormant Ordinary 50p – 100%

English Country Inns Limited Dormant Ordinary 50p – 100%

Fayolle Limited Dormant Ordinary £1 – 100%

John Marston’s Taverners Limited Dormant Ordinary £1 – 100%

Lambert Parker & Gaines Limited Dormant Ordinary £1 – 100%

Mansfield Brewery Limited Dormant Ordinary 25p – 100%

Mansfield Brewery Trading Limited Dormant Ordinary £1 – 100%

Marston, Thompson &

EvershedLimited

Dormant Ordinary 25p – 100%

Marston’s Property Developments

Limited

Dormant Ordinary £1 – 100%

Osprey Inns Limited Dormant Ordinary £1 – 100%

Pitcher and Piano Limited Dormant Ordinary £1 – 100%

Porter Black (2003) Limited Dormant Ordinary £1 – 100%

QP Bars Limited Dormant Ordinary £1 – 100%

Sherwood Forest Properties

Limited

Dormant Ordinary £1 – 100%

W&DB (Finance) Limited Dormant Ordinary £1 – 100%

Wizard Inns Limited

Dormant ‘A’ Ordinary 1p – 100%

Deferred 1p – 100%

Notes continued

For the 52 weeks ended 30 September 2023

150 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

6 FIXED ASSET INVESTMENTS CONTINUED

The Company had the following associates at 30 September 2023:

Nature of

business Class of share

Proportion of

shares held

directly by

Marston’s PLC

Proportion of

shares held

by the Group

Carlsberg Marston’s Limited Brewer Ordinary £1 – 40%

The registered office of Carlsberg Marston’s Limited is Marston’s House, Brewery Road,

Wolverhampton, WV1 4JT.

7 DEBTORS

Amounts falling due within one year

2023

£m

2022

£m

Amounts owed by Group undertakings 252.3 252.3

Derivative financial instruments 1.1 –

Prepayments and accrued income 0.1 0.1

Other debtors 3.8 3.3

257.3 255.7

Amounts falling due after more than one year

2023

£m

2022

£m

12.5% subordinated loan owed by Group undertaking 668.3 590.4

Derivative financial instruments – 1.8

668.3 592.2

The gross contractual amount outstanding in respect of the subordinated loan was £1,687.2

million (2022: £1,490.4 million) and the impact of discounting the expected cash flows at

12.5% was £1,018.9 million (2022: £900.0 million).

8 CREDITORS

Amounts falling due within one year

2023

£m

2022

£m

Amounts owed to Group undertakings 504.0 449.4

Finance leases 0.9 0.9

Other lease related borrowings (0.1) (0.1)

Corporation tax 34.5 15.4

Derivative financial instruments 1.1 –

Accruals and deferred income 10.0 9.6

Other creditors – 0.4

550.4 475.6

Amounts falling due after more than one year

2023

£m

2022

£m

Finance leases 19.0 19.5

Other lease related borrowings 88.6 88.5

Other borrowings 40.0 40.0

Preference shares 0.1 0.1

Derivative financial instruments – 1.8

Accruals and deferred income 7.8 9.2

155.5 159.1

The preference shares carry the right to a fixed cumulative preferential dividend. They

participate in the event of a winding-up and on a return of capital and carry the right to

attend and vote at general meetings of the Company, carrying four votes per share.

Other lease related borrowings represent amounts due under sale and leaseback

arrangements that do not fall within the scope of Section 20 ‘Leases’ of FRS 102. The

Company has an option to repurchase each leased property for a nominal amount at the

end of the lease. The leases have terms of 35 to 40 years and rents which are linked to RPI,

subject to a cap and collar.

The amount falling due for payment after more than five years from the balance sheet

dateon debts repayable by instalments was £106.8 million (2022: £107.1 million). Debts of

£0.1million (2022: £0.1 million) were repayable otherwise than by instalments after more

thanfive years from the balance sheet date.

Notes continued

For the 52 weeks ended 30 September 2023

151Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

9 PROVISIONS FOR LIABILITIES

Deferred

tax

£m

Property

leases

£m

Total

£m

At 2 October 2022 1.0 3.7 4.7

Provided in the period – 1.3 1.3

Released in the period – (0.5) (0.5)

Utilised in the period – (0.6) (0.6)

Unwind of discount – 0.1 0.1

Adjustment for change in discount rate – (0.1) (0.1)

Charged to profit or loss 0.9 – 0.9

Credited to other comprehensive income (0.6) – (0.6)

At 30 September 2023 1.3 3.9 5.2

Payments are expected to continue in respect of these property leases for periods of

1to21years (2022: 1 to 22 years). There is not considered to be any significant uncertainty

regarding the amount and timing of these payments.

Deferred tax

The amount provided in respect of deferred tax is as follows:

2023

£m

2022

£m

Excess of capital allowances over accumulated depreciation 6.4 6.1

Other (5.1) (5.1)

1.3 1.0

A deferred tax asset of £8.0 million (2022: £7.7 million) arising on capital losses has not been

recognised due to uncertainty over its future recoverability.

10 FINANCIAL INSTRUMENTS

Carrying amount of financial assets

2023

£m

2022

£m

Measured at fair value through profit or loss 1.1 1.8

Carrying amount of financial liabilities

2023

£m

2022

£m

Measured at fair value through profit or loss 1.1 1.8

The only financial instruments that the Company holds at fair value are interest rate swaps.

The fair values of the Company’s interest rate swaps are obtained using a market approach

and reflect the estimated amount the Company would expect to pay or receive on

termination of the instruments, adjusted for the Company’s own credit risk. The Company

utilises valuations from counterparties who use a variety of assumptions based on market

conditions existing at each balance sheet date.

11 OPERATING LEASE COMMITMENTS

At 30 September 2023 the Company had outstanding commitments for future minimum lease

payments under non-cancellable operating leases as follows:

2023

£m

2022

£m

Within one year 7.0 6.4

In more than one year but less than five years 20.9 21.6

In more than five years 38.1 43.8

66.0 71.8

Notes continued

For the 52 weeks ended 30 September 2023

152 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

12 FINANCE LEASE OBLIGATIONS

The Company leases various properties and items of equipment under finance leases. The

leases have various terms, escalation clauses and renewal rights. Future minimum lease

payments under finance leases are as follows:

2023

£m

2022

£m

Within one year 2.0 1.9

In more than one year but less than five years 5.4 5.6

In more than five years 28.3 29.7

35.7 37.2

Future finance charges (15.8) (16.8)

Present value of finance lease obligations 19.9 20.4

13 EQUITY SHARE CAPITAL

2023 2022

Allotted, called up and fully paid

Number

Value

£m

Number

Value

£m

Ordinary shares of 7.375p each 660.4 48.7 660.4 48.7

14 RESERVES

The share premium account comprises amounts in excess of nominal value received for the

issue of shares less any transaction costs.

When effective freehold land and buildings are revalued any gains and losses are

recognised in the revaluation reserve, except to the extent that a revaluation gain reverses

arevaluation loss previously recognised in profit or loss or a revaluation loss exceeds the

accumulated revaluation gains recognised in the revaluation reserve; such gains and losses

are recognised in profit or loss. The associated deferred tax on revaluations is also recognised

in the revaluation reserve. Amounts representing the equivalent depreciation are transferred

to profit and loss reserves annually and the full amount is transferred on disposal of the

associated property.

The capital redemption reserve arose on share buybacks.

Details of own shares are provided in note 29 to the Group financial statements.

15 GUARANTEES AND CONTINGENT LIABILITIES

The Company has entered into a Deed of Guarantee with Marston’s Trading Limited

(‘Trading’) and the Trustees of the Marston’s PLC Pension and Life Assurance Scheme

(‘theScheme’) whereby it guarantees to the Trustees the ongoing obligations of Trading to

contribute to the Scheme and the obligations of Trading to contribute to the Scheme in the

event of a debt becoming due under section 75 of the Pensions Act 1995 on the occurrence

of either Trading entering liquidation or the Scheme winding up.

The Company has guaranteed the obligations of Trading under certain of its banking

facilities and the obligations of Marston’s Estates Limited under various property leases.

Notes continued

For the 52 weeks ended 30 September 2023

153Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Abbreviations

APM Alternative performance measure

CAPEX Capital expenditure

EBITDA Earnings before interest, tax, depreciation, and amortisation

FCF Free cash flow

LFL Like-for-like

NAV Net asset value

NCF Net cash flow

Definitions

APMs

In addition to statutory financial measures, these full year results include financial measures

that are not defined or recognised under IFRS or FRS 102, all of which the Group considers to

be alternative performance measures (APMs). APMs should not be regarded as a complete

picture of the Group’s financial performance, which the Group presents within its total

statutory results.

The APMs are used by the Board and management to analyse operational and financial

performance and track the Group’s progress against long-term strategic plans. The APMs

provide additional information to investors and other external shareholders to enhance their

understanding of the Group’s results and comparison with industry peers.

CAPEX

Capital expenditure is the cost of acquiring and maintaining fixed assets, comprising both

maintenance and investment expenditure. It is a measure by which the Group and interested

stakeholders assess the level of investment in the estate to maintain the Group’s profit. Capital

expenditure is the purchase of property, plant and equipment and intangible assets as

presented directly within the Group cash flow statement.

FCF

FCF represents the net cash inflow from operating activities, adjusted for cash movements on

interest and debt issue costs paid. The Group uses FCF to determine bonus outcomes for

Directors’ remuneration.

LFL sales

LFL sales reflect sales for all pubs that were trading in the two periods being compared

expressed as a percentage, excluding those pubs that have changed format between

tenanted and leased and the rest of the estate. LFL sales does not exclude those pubs that

have changed format between managed and franchised.

The inclusion of a pub within LFL sales is considered on a daily basis and a pub is included

within LFL sales for only the days within the trading period where it meets the definition of LFL.

A site is considered fully open for trading if it generated more than £100 per day. If a site is

acquired or disposed of during the two periods being compared, LFL sales includes the days

where the site is fully open for trading in both periods.

LFL sales is a widely used industry measure which provides better insight into the trading

performance of the Group as total revenue is impacted by acquisitions, disposals, and

investment into the estate through conversions and refurbishments.

NAV per share

NAV per share is the value of net assets of the Group, divided by the number of shares in issue

excluding own shares held.

NCF

NCF is the increase/decrease in cash and cash equivalents in the period, adjusted for

movements in other cash deposits and the cash movement in debt. NCF is used by the Group

to determine targets for LTIP awards.

Net debt

Net debt is defined as the sum of cash and cash equivalents and other cash deposits, less

total borrowings, at the balance sheet date. Net debt is presented excluding lease liabilities

as the target for the Group’s ‘Back to a billion’ corporate goal is to reduce net debt excluding

lease liabilities to below £1 billion.

Non-underlying

Non-underlying items are presented separately on the face of the income statement and are

defined as those items of income and expense which, because of the materiality, nature

and/or expected infrequency of the events giving rise to them, merit separate presentation

to enable users of the financial statements to better understand elements of financial

performance in the period, so as to facilitate comparison with future and prior periods. As

management of the freehold and leasehold property estate is an essential and significant

area of the business, the threshold for classification of property related items as non-

underlying is higher than other items.

Additional information

Alternative performance measures

154 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Non-underlying (continued)

Underlying results should not be regarded as a complete picture of the Group’s financial

performance as they exclude specific items of income and expense. The full financial

performance of the Group is presented within its total statutory results.

Operating profit/(loss)

Operating profit/(loss) is revenue less net operating expenses, plus the share of results from

associates. Operating profit/(loss) is presented directly on the Group income statement.

Itisnot defined in IFRS however it is a generally accepted profit measure.

Outlet sales

Outlet sales represents all revenue that is generated at our managed and franchised pubs,

which includes food, drink, accommodation, and gaming machine income.

Profit/(loss) before tax

Profit/(loss) before tax is profit for the period presented before the tax charge/credit for the

period. Profit/(loss) before tax is presented directly on the Group income statement. It is not

defined in IFRS, however is a generally accepted profit measure.

Retail sales

Retail sales represents all revenue that is generated through the Group’s EPOS (electronic

point of sale) till systems in our managed and franchised pubs, which includes food, drink,

andaccommodation sales.

Underlying EBITDA

Underlying EBITDA is the earnings before interest, tax, depreciation, amortisation and

non-underlying items. The Directors regularly use underlying EBITDA as a key performance

measure in assessing the Group’s profitability. The measure is considered useful to users of

thefinancial statements as it is a widely used industry measure which allows comparison to

peers, comparison of performance across periods, and is used to determine bonus outcomes

for Directors’ remuneration.

Wholesale sales

Wholesale sales represents revenue generated from our tenanted and leased pubs.

Year

The current year refers to the 52-week period ended 30 September 2023. The prior year refers

to the 52-week period ended 1 October 2022.

Reconciliation of APMs to Marston’s strategy

APM

Closest equivalent

statutory measure

Link to corporate strategyor

goal Link to ESG strategy

CAPEX Purchase of property,

plant and equipment

and intangible assets

We will grow (strategy)

Links to the third element

of our strategy to deliver

high returning growth

capex.

Environment

We want to generate

high returns on energy

efficient technology

expenditure.

FCF Net cash flow from

operating activities

We will grow (strategy)

Links to the third element

of our strategy to exploit

M&A opportunities.

Investors

We want to attract

long-term equity and

debt investors who

believe in and support

our strategy.

NCF Net increase/

(decrease) in cash and

cash equivalents

LFL sales Revenue Back to a billion (goal)

Achieving £1 billion sales.

Communities

We want to generate

additional income to

increase our charitable

donations.

NAV per share Net assets We will grow (strategy)

Links to the third element

of our strategy to increase

returns.

Investors

We want to attract

long-term equity and

debt investors who

believe in and support

our strategy.

Net debt Borrowings Back to a billion (goal)

Reducing net debt

(excluding lease liabilities)

to below £1 billion.

Investors

We want to drive

shareholder value by

reducing borrowings to

below £1 billion.

Underlying

operating

margin

Operating profit We raise the bar (strategy)

Links to the second

element of our strategy,

toachieve operational

excellence.

Environment

We want to improve

profitability by reducing

our energy usage.

Underlying

EBITDA

Profit/(loss) before tax

Additional information continued

Alternative performance measures

155Marston’s PLC Annual Report and Accounts 2023

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Reconciliation of APMs to statutory results

LFL sales

Statutory reference

52 weeks to

30September

2023

£m

52 weeks to

1October

2022

£m

LFL

LFL retail sales 760.9 691.1 10.1

Non-LFL retail sales 45.2 43.0

Retail sales 806.1 734.1 9.8

Non-EPOS outlet sales 26.7 23.1

Outlet sales Note 3 832.8 757.2 10.0

9 weeks to

2 December

2023

£m

9 weeks to

3 December

2022

£m

LFL

LFL retail sales 125.2 116.6 7.4

Non-LFL retail sales 6.3 4.4

Retail sales 131.5 121.0 8.7

FCF

Statutory reference

2023

£m

2022

£m

Net cash inflow from operating activities Cash flow statement 141.2 134.0

Interest received Cash flow statement 1.8 0.9

Interest paid Cash flow statement (93.1) (79.4)

Arrangement costs of bank facilities Cash flow statement (4.0) –

Free cash flow 45.9 55.5

NAV per share

Statutory reference 2023 2022

Net assets (£m) Balance sheet 640.1 648.1

Number of shares outstanding Note 28, 29 633.5 633.3

NAV per share 1.01 1.02

NCF

Statutory reference

2023

£m

2022

£m

Decrease in cash and cash equivalents Note 30 (1.2) (4.5)

Increase/(decrease) in other cash deposits Note 30 0.1 (0.2)

Cash outflow from movement in debt Note 30 35.5 30.9

Net cash flow 34.4 26.2

Net debt

Statutory reference

2023

£m

2022

£m

Decrease in cash and cash equivalents Note 30 (1.2) (4.5)

Increase/(decrease) in other cash deposits Note 30 0.1 (0.2)

Cash outflow from movement in debt

excluding lease liabilities 30.4 22.4

Net cash inflow 29.3 17.7

Non-cash movements and deferred issue

costs 1.5 (1.6)

Movement in net debt excluding lease

liabilities in the period 30.8 16.1

Net debt excluding lease liabilities at

beginning of the period Note 30 (1,216.2) (1,232.3)

Net debt excluding lease liabilities at end of

the period Note 30 (1,185.4) (1,216.2)

Additional information continued

Alternative performance measures

156 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Underlying EBITDA

Statutory reference

2023

£m

2022

£m

Operating profit Income statement 100.1 145.4

Non-underlying operating items Note 4 34.6 (26.7)

Depreciation and amortisation Cash flow statement 45.5 44.2

Underlying EBITDA including income

fromassociates 180.2 162.9

Income from associates Income statement (9.9) (3.3)

Underlying EBITDA excluding income

fromassociates 170.3 159.6

Underlying operating margin

Statutory reference

2023

£m

2022

£m

Operating profit Income statement 100.1 145.4

Income from associates Income statement (9.9) (3.3)

Pub operating profit 90.2 142.1

Non-underlying operating items Note 4 34.6 (26.7)

Underlying operating profit excluding income

from associates (‘pub operating profit’) 124.8 115.4

Revenue Income statement 872.3 799.6

Underlying operating margin 14.3% 14.4%

26 weeks to

1April

2023

£m

26 weeks to

30September

2023

£m

52 weeks to

30September

2023

£m

Operating profit 45.3 54.8 100.1

Income from associates (2.2) (7.7) (9.9)

Non-underlying operating items – 34.6 34.6

Underlying operating profit excluding income from

associates (‘pub operating profit’) 43.1 81.7 124.8

Revenue 407.0 465.3 872.3

Underlying operating margin 10.6% 17.6% 14.3%

Additional information continued

Alternative performance measures

157Marston’s PLC Annual Report and Accounts 2023

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Annual General Meeting (AGM)

The Company’s AGM will be held at 10:00am on 23 January 2024 at The Farmhouse

atMackworth, 60 Ashbourne Road, Derby DE22 4LY.

Any changes to the AGM arrangements will be communicated to shareholders before the

AGM through our website and, where appropriate, by RNS announcement.

Online voting for the AGM

Shareholder participation remains important to us and we strongly encourage all

shareholders to participate in the business of the meeting by submitting your votes on each

of the resolutions in advance.

To register the appointment of a proxy electronically, visit www.sharevote.co.uk and follow

the instructions provided (you will need the voting numbers found on your Form of Proxy).

Alternatively, shareholders who have already registered with Equiniti Registrars’ online

portfolio service, Shareview, can appoint their proxy electronically by logging on to their

portfolio at www.shareview.co.uk using their user ID and password. Once logged in,

click‘view’ on the ‘My Investments’ page. Click on the link to vote and follow the on-

screeninstructions.

Financial calendar

AGM and Interim Management Statement 23 January 2024

Half-year results May 2024

Full-year results December 2024

These dates are indicative only and may be subject to change.

The Marston’s website

Shareholders are encouraged to visit our website www.marstonspubs.co.uk for further

information about the Company. The dedicated Investors section on the website contains

information specifically for shareholders, including share price information, historical

dividend amounts and payment dates together with this year’s (and prior years’)

AnnualReport and Accounts.

Registrars

The Company’s shareholder register is maintained by our Registrar, Equiniti. If you have any

queries relating to your Marston’s PLC shareholding you should contact Equiniti directly by

one of the methods below:

Online: help.shareview.co.uk – from here you will be able to securely email Equiniti with

your query

Telephone: +44 (0)371 384 2274

By post: Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA

1 Lines are open from 8:30am to 5:30pm (UK time), Monday to Friday, excluding public holidays in England

and Wales. If calling from outside of the UK, please ensure the country code is used.

Dividend payments

Given the priority to reduce the overall level of borrowing and the continued

macroeconomic uncertainty, the Board have agreed that no dividends will be paid in

respect of the reporting year. The Board remains cognisant of the importance of dividends

to shareholders and intends to keep potential future dividends under review.

However, if you believe you have any unclaimed dividends or have misplaced a cheque,

please contact Equiniti or visit www.shareview.co.uk. By completing a bank mandate form,

dividends can be paid directly into your bank or building society account. Those selecting

this payment method will benefit from receiving cleared funds in their bank account on

thepayment date, avoiding postal delays and removing the risk of any cheques being

lostin the post. To change how you receive your dividends contact Equiniti or visit

www.shareview.co.uk.

Duplicate documents

If you have received two or more sets of the documents concerning the AGM this means

that there is more than one account in your name on the shareholder register, perhaps

because either your name or your address appear on each account in a slightly different

way. If you think this might be the case and would like to combine your accounts, please

contact Equiniti.

Additional information continued

Information for shareholders

158 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Moving house?

It is important that you notify Equiniti of your new address as soon as possible. If you reside in

the UK, this can be done quickly over the telephone or in writing, quoting your full name,

shareholder reference number (if known), previous address and new address.

Electronic communications

Changes in legislation in recent years allow the Company to use its corporate website as

the main way to communicate with shareholders. Annual Report and Accounts are only

sent to those shareholders who have opted to receive a paper copy. Registering to receive

shareholder documentation from the Company electronically will allow shareholders to:

• view the Annual Report and Accounts on the day it is published;

• receive an email alert when the Annual Report and Accounts and any other

shareholder documents are available;

• cast their AGM votes electronically; and

• manage their shareholding quickly and securely online, through www.shareview.co.uk

This reduces our impact on the environment, minimises waste and reduces printing and mailing

costs. For further information and to register for electronic shareholder communications, visit

www.shareview.co.uk.

Buying and selling shares in the UK

If you wish to buy or sell Marston’s PLC shares and hold a share certificate, you can:

• use the services of a stockbroker or high street bank; or

• use a telephone or online service. If you sell your shares in this way you will need to

present your share certificate at the time of sale. Details of a low cost dealing service

may be obtained from www.shareview.co.uk or 0345 603 7037

1 Lines are open Monday to Friday, 8:00am to 4:30pm for dealing and until 6.00pm for enquiries (UK time),

excluding English public holidays.

Ordinary Shares

Range of Shareholding

Balance ranges

Total number

ofholdings

Percentage

ofholders

Total number

ofshares

Percentage

issued capital

1–1,000 3,368 46.50% 1,337,094 0.2%

1,001–10,000 2,913 40.22% 10,805,765 1.64%

10,001–100,000 728 10.05% 19,522,041 2.96%

100,001–1,000,000 151 2.08% 51,350,997 7.77%

1,000,001–999,999,999 83 1.15% 577,346,297 87.43%

65.51%

Institutional investors

Analysis of shareholder register

by investor type

Private client fund managers

Private investors

26.82%

7.67%

Additional information continued

Information for shareholders

159Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

Share fraud warning

Share fraud includes scams where investors are called out of the blue and offered an

inflated price for shares they own or shares that often turn out to be worthless or non-

existent. These calls come from fraudsters operating ‘boiler rooms’ that are mostly based

abroad. While high profits are promised, those who buy or sell shares in this way usually lose

their money. The Financial Conduct Authority (FCA) has found most share fraud victims are

experienced investors who lose an average of £20,000, with around £200 million lost in the

UK each year.

If you are offered unsolicited investment advice, discounted shares, a premium price for

shares you own, or free company or research reports, you should take these steps before

handing over any money:

• Get the name of the person and organisation contacting you.

• Check the Financial Services Register at www.fca.org.uk/register to ensure they are

authorised.

• Use the details on the FCA Register to contact the firm.

• Call the FCA Consumer Helpline on 0800 111 6768 if there are no contact details on the

• Search the FCA list of unauthorised firms and individuals to avoid doing business with.

• Remember, if it sounds too good to be true, it probably is.

If you use an unauthorised firm to buy or sell shares or other investments, you will not have

access to the Financial Ombudsman Service or Financial Services Compensation Scheme

ifthings go wrong.

If you are approached about a share scam you should tell the FCA using the share fraud

reporting form at www.fca.org.uk where you will find out about the latest investment scams.

You can also call the Consumer Helpline on 0800 111 6768.

Company details

Registered office: St Johns House, St Johns Square, Wolverhampton WV2 4BH

Telephone: 01902 907250

Company registration number: 31461

Investor queries: investorrelations@marstons.co.uk

Auditor

KPMG LLP, One Snowhill, Snowhill Queensway, Birmingham B4 6GH

RSM UK Audit LLP 10th Floor, 103 Colmore Row, Birmingham, B3 3AG

Advisers

JP Morgan Cazenove, 20 Moorgate, London EC2R 6DA

Peel Hunt LLP, Moor House, 120 London Wall, London EC2Y 5ET

Solicitors

Freshfield Bruckhaus Deringer LLP, 65 Fleet Street, London EC4Y 1HS

Slaughter & May LLP, One Burnhill Row, London EC1Y 8YY

Additional information continued

Information for shareholders

160 Marston’s PLC Annual Report and Accounts 2023

Strategic report Governance Financial statements Additional information

A&E Amendment and extension

CAPEX Capital expenditure

CMBC Carlsberg Marston’s Brewing Company

D&I Diversity and inclusion

DM2BPO Doing more to be proud of

DNED Designated Non-executive Director

EBITDA Earnings before interest, taxes, depreciation, and amortisation

EHO Food hygiene rating issued by Food Standards Agency

EPS Earnings per share

ESG Environmental, Social and Governance

EV Electric vehicle

FRC Financial Reporting Council – independent regulator

FTSE4Good An index designed to measure the performance of

companies demonstrating strong Environmental, Social and

Governance practices

FY Financial year

H1 The first half of the financial year

H2 The second half of the financial year

NED Non-executive Director

NLW National Living Wage

NMW National Minimum Wage

OHID Office for Health Improvement and Disparities

PBT Profit before tax

PCA Pubs Code Adjudicator

Pillar Franchise-style agreement with independent food offer

Pub Support Centre Marston’s head office

RCF Revolving credit facility

ROCE Return on capital employed – a measure of how effectively we

use the capital invested in our business

SEDEX Supplier Ethical Data Exchange – membership organisation for

auditing supply chains

SONIA Sterling Overnight Index Average, overnight indexed swaps for

unsecured transactions

TCFD Task Force on Climate-related Financial Disclosures

The Pubs Code Statutory regulation effective 21 July 2016

TSR Total shareholder return – a combination of share price

appreciation and dividends paid

Total revenue Total revenue from continuing operations

Additional information continued

Glossary

Designed and produced by Instinctif Partners

www.creative.instinctif.com

161Marston’s PLC Annual Report and Accounts 2023

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Marston’s PLC Annual Report and Accounts 2023

Marston’s PLC

St Johns House, St Johns Square,

Wolverhampton WV2 4BH

Telephone 01902 907250

Registered No. 31461