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Shared
Good Times
ANNUAL REPORT AND ACCOUNTS 2024
1
A new chapter
Our company purpose of Shared Good Times is
underpinned by a clear, consumer-led strategy
which will enable us to deliver on our long-term
vision of being the UK’s leading local pub company.
Our purpose
Shared Good Times
Our vision
To be the UK’s leading local
pub company
FINANCIAL HIGHLIGHTS
£898.6m
Total revenue
2023: £872.3m
5.2p
Underlying total earnings/(loss) pershare1
2023: 3.5p
£192.5m
Underlying EBITDA1
2023: £170.3m
£14.4m
Profit/(loss) before tax1
2023: £(30.6)m
2.8p
Total earnings/(loss) per share1
2023: (3.0)p
£42.1m
Underlying profit/(loss) before tax
2023: £25.6m
1. Results from continuing operations.
READ OUR IMPACT REPORT ONLINE
AT WWW.MARSTONSPUBS.CO.UK
Strategic report
A new chapter IFC
Investment case 2
Chair’s statement 3
CEO’s statement 5
Our business model 7
Our strategy 8
Our key performance indicators 10
Group operational and financial review 11
Stakeholder engagement and
Section172(1) statement 14
Non-financial and sustainability
informationstatement 18
Sustainability 19
Risk and risk management 35
Governance
Governance at a glance 43
Chair’s introduction 44
Board of Directors 46
Corporate Governance report 48
Nomination Committee report 52
Audit Committee report 57
Directors’ Remuneration report 61
Directors’ report 77
Statement of Directors’ responsibilities 80
Financial statements
Independent Auditor’s report
to the members of Marston’s PLC 81
Group income statement 88
Group statement of
comprehensiveincome 89
Group cash flow statement 90
Group balance sheet 91
Group statement of changes in equity 93
Notes to the Group accounts 95
Company balance sheet 131
Company statement of
changes in equity 132
Notes to the Company accounts 133
Additional information
Alternative performance measures 141
Information for shareholders 145
Historical KPIs and Glossary 148
Alternative performance measures (APMs) are defined and reconciled into the statutory equivalent in the
Additional Information section on page 141.
Strategic report Governance Financial statements Additional information
1Marston’s PLC Annual Report and Accounts 2024
CONTENTS
SHARED GOOD TIMES – AN INVESTMENT CASE FOR A RELIABLE GROWTH COMPANY
We are a leading pub business with an estate of 1,339 pubs, supported by over 10,000 employees and 753PubPartners, and our vision is to be the
UK’sleading Local Pub Company. Our Purpose is to offer our guests thebest experience and locations for Shared Good Times. This is underpinned
byaclear strategy to create a high-margin, highly cash-generative model based on differentiated formats and a brand portfolio that isnaturally
balancedtoappeal to a range of consumers.
Our strategy is centred around five key value drivers, enabling us to deliver on our long-term target of becoming the UK’s leading local pubcompany. These value drivers will leverage
thestrength of our market-leading pub operating model, increasing revenue and driving efficiencies, whilst building the basis of a reliable growth company.
POWERFUL VALUE
DRIVERSFOR GROWTH
DIFFERENTIATED TO WIN
IN A GROWING MARKET
SUSTAINED FREE CASH
FLOWGENERATION
CLEAR AND CONSISTENT
METRICS TO TRACK SUCCESS
£50 million+
Like-for-like revenue growth faster than the
market, sustained capex and further
operating and cost efficiencies will deliver
£50 million+ of recurring free cash flow in
the near term.¹
1 Market is forecast to grow at 3% CAGR, according
to Mintel. Free cash flow is defined as cash flow
after capital expenditure, interest and tax but
before debt repayments and disposals.
Our investment case is based on our
five key value drivers:
SEE GROUP OPERATIONAL AND FINANCIAL
REVIEW REPORT ON PAGE 11
1. Execute a market-leading
pub operating model
Capex to create differentiated
pub formats
Digital transformation
Expansion of Managed
& Partnership Models
Leveraging Marston’s synergies
in targeted acquisitions
SEE PAGE 8
1
2
3
4
5
Suburban dominated locations
Flexible estate to evolve at pace
Pubs with scope for multi-occasions
Expertise in running local pubs
GOOD TIMES FOR OUR GUESTS
The Marston’s Opportunity
Near to medium-term targets:
Revenue growth ahead of the market
EBITDA margin expansion of 200-300 basis
points, beyond FY24
£50m+ recurring free cash flow
>30% incremental returns on investment capex
Contributing to the transfer of value
toshareholders as a result of growth in
enterprise value, plus paying down debt.
Strategic report Governance Financial statements Additional information
2 Marston’s PLC Annual Report and Accounts 2024
An investment case for a reliable growth company
INVESTMENT CASE
“I am confident that the
Executive team have
positioned Marston’s to
deliversustainable and
incremental long-term value
for our shareholders.”
KEN LEVER
CHAIR
I chose to join Marston’s as Chair due to the
high calibre of its people, from the Group’s
experienced and ambitious Board, to its
widerteam of energetic and passionate
colleagues, who are ambitious for success.
In my first few months I have been truly
impressed by the dedication I have seen
throughout every level of the organisation,
particularly given the changes that have
taken place.
This past year has been a period of significant
change for Marston’s, marked by the
disposal of the remaining 40% interest in
Carlsberg Marston’s Brewing Company
(CMBC), the embedding of new leadership,
and a realignment of our strategic
direction. With key appointments to the
Board and Executive team, including
theappointment of Justin Platt as Chief
Executive Officer, we have taken decisive
steps to ensure that our leadership is
equipped to position our business for
growth. We are committed to driving
revenue growth through great guest
experiences, enhancing our margin by
improving operational performance, and
carefully managing capital investment
todeliver sustainable growth in cash flow
and enhance value for our shareholders
and stakeholders.
Progress in FY2024 and plans
forFY2025
The successful disposal of the remaining
interest in CMBC in July marks a turning
point for our business. It is the start of a new
chapter for Marston’s as a pure-play
hospitality business with a continuing
commitment to reduce debt to a more
manageable level. As at the year-end the
current net debt (excluding IFRS 16 lease
liabilities) stands at £884 million, representing
a reduction of approximately £300 million
on FY2023.
I was delighted to be asked to make a few
introductory remarks at the Capital Markets
Day in October. It was a pleasure to be
apart of the event. Justin articulated a
strategy that aims to position Marston’s for
sustainable, long-term growth. Central to
this strategy is our market-leading operating
model and the reformatting of our pubs
intofive differentiated and consumer-led
formats. These formats are designed to offer
more tailored experiences for our guests
and will be supported by targeted
marketing activity aligned to each format,
ultimately driving increased footfall and
higher spend per visit.
Disciplined capital allocation will be key.
The priorities will be investment for growth,
divestment of underperforming operations
and applying cash flow to further pay down
debt, eventually paving the way to the
re-instatement of dividends when we are
ina position to do so.
Our Board and our Executive
management
This year, we have made important changes
to the Board and Executive team to further
align leadership with the evolving needs
ofour business.
William Rucker stepped down as Chair of
the Board in early July due to other business
commitments. William became Chair in
2018 and provided leadership to the Board
during a particularly difficult period in the
Group’s history, including the social and
operational impacts of COVID-19 and
ongoing liquidity challenges. His final action
as Chair was to deliver, alongside Justin,
theexit from CMBC. On behalf of the Board,
I thank William for the time and commitment
he has given to Marston’s over the years
and wish him well for the future.
Justin Platt joined the Board as Chief
Executive Officer in January. His significant
experience across both strategy and
operations in the hospitality industry is
already leading to the generation of new
and creative ideas for our business. Justin
has made a significant impact in the short
time he has been in post, leading the
management team in developing our
newstrategy and positioning the business
for long-term growth. His enthusiasm for
Marston’s and the broader hospitality
industry is invigorating, while his clarity of
thought and dedication to delivering great
guest experiences and nurturing
performance driven teams provide me with
great excitement for what the future holds.
Strategic report Governance Financial statements Additional information
3Marston’s PLC Annual Report and Accounts 2024
Sustainable and incremental value creation
CHAIR’S STATEMENT
Rachel Osborne was also appointed to the
Board in January as Non-Executive Director
and Chair of the Audit Committee. She
brings significant expertise in financial and
general management to the Board and
succeeds Matthew Roberts as Chair of the
Audit Committee.
At the Executive level, Neil Campbell joined
the Group as Chief Operating Officer in
October, bringing strong sector experience
from senior roles at SSP and Whitbread.
Meanwhile Ed Hancock, a long-standing
member of Marston’s leadership team, has
taken on the new role of Chief Development
Officer, contributing extensive knowledge
of both the business and our strategic
direction.
Our shareholders
In recent years and continuing throughout
2024, the UK equity market has failed to
properly value UK listed businesses, large
and small. It is small wonder that Private
Equity has capitalised on this opportunity,
acquiring a number of UK listed companies.
Although Marston’s has previously
experienced challenges in delivering
performance in line with expectations,
impacting market confidence, the
valuation of the business at such a wide
discount from the net tangible asset value
does appear to be unjustified. Going
forward, the Board’s priority will be on
valuecreation and growing the intrinsic
value of the business, while better
understanding the value gap between
themarket value and what we believe the
intrinsic value to be. Over time, our ambition
is to see this value gap reduce for the
benefit of our shareholders.
Our People
Finally, none of the significant progress
made this year would have been possible
without the dedication and hard work
ofour People. On behalf of the Board,
Iwant to thank every member of the
Marston’s team for their commitment
andeffort throughout the year – it has
notgone unnoticed.
I would also like to extend my gratitude
toour shareholders for their continued
support and trust.
As we look ahead to the opportunities
andchallenges of the coming year,
Iremain confident that we are well-
positioned to deliver outstanding guest
experiences, which will in turn provide
sustainable andincremental long-term
value for ourshareholders.
Strategic report Governance Financial statements Additional information
4 Marston’s PLC Annual Report and Accounts 2024
CHAIR’S STATEMENT continued
“FY2024 has been a defining
year for Marston’s, laying
strong foundations for growth.”
JUSTIN PLATT
CHIEF EXECUTIVE OFFICER
Reflecting on my first 11months as Chief
Executive Officer, I am proud of the
significant transformation Marston’s has
been able to achieve in that time. With a
simplified and focused pub operating
model, revitalised management team,
establishment of a clear set of value drivers,
a stable balance sheet with reducing
leverage and new financial targets, 2024
has been a defining year for Marston’s as
we enter a new chapter as apure-play
hospitality business. These changes are
sharpening our focus on delivering
exceptional guest experiences and setting
the foundations for a reliable growth
broad range of usage occasions. By their
very nature, and given our size, pubs have
scope to deliver on these multiple usage
occasions, particularly the increasing
demand for low-tempo events during the
week. In addition, the accelerated shift of
spending to suburban areas brought on by
the pandemic means that the local pub
continues to thrive, with community-based
pubs like ours an essential part of British life.
The power of the local has only got stronger
in recent years and, as experts in running
local pubs, with 90% of our estate located
insuburban areas, we are well-placed
tocapitalise on this opportunity.
The pub market is evolving, but Marston’s
isa business that excels at managing
localpubs which lie at the heart of the
communities they serve. The key to our
success is in ensuring consistency across
ouroperations and scaling this across our
estate, ensuring every guest has a great
and sociable time, whatever the occasion
CMBC sale
Marston’s is now a pure-play hospitality
business. Our job is not just to own and run
pubs but to run them really well. The sale of
our 40% stake in CMBC, which completed in
July, was a defining moment for the Group.
We now benefit from a predominantly
freehold estate, with an asset value of
approximately £2.1 billion, and a simplified
and focused pub operating model that
provides the foundation for growth. The sale
resulted in net proceeds of approximately
£202.6 million which supported a reduction
in net debt of over £300 million in FY2024,
bringing us well below our net debt target
ahead of schedule, while significantly
enhancing our financial and operational
flexibility. The proceeds not only support our
ongoing deleveraging efforts but also put us
in a stronger position to reinvest in the areas
that will drive our growth going forward.
CMBC remains a valued strategic partner
tothe business, and we continue to benefit
from our ongoing long-term brand
distribution agreement with them.
Shared Good Times
Changing pub market dynamics and the
CMBC sale have been instrumental in laying
the foundations for our new strategy which
we announced to the market at our CMD in
October. This strategy is focused on building
a high-margin, highly cash-generative
business, based on differentiated formats,
and a brand portfolio that is naturally
balanced to appeal across a range of
consumer segments. It is a strategy that
supports our company purpose of Shared
Good Times and will see us deliver on our
long-term target of becoming the UK’s
leading local pub company. The delivery
ofthis strategy will centre around five key
value drivers;
• Executing a market-leading operating
model
• Capex to create five differentiated pub
formats
• Digital transformation
• Expansion of Managed and Partnership
models
• Leveraging Marston’s synergies in
targeted M&A
company. I am excited about what lies
ahead as we embed our refreshed strategy
across the business, delivering great shared
experiences for our guests and sustainable
growth for our shareholders.
Market dynamics
At the heart of Marston’s is a business focused
on the market for socialising. Pubs, particularly
local pubs, continue to play a pivotal role
infulfilling the human desire to connect
inperson. In the UK, pubs hold a unique
position as central hubs for social interaction
– 88% of adults have visited a pub in the
past year, with a third visiting at least once
amonth. The market also continues to
grow;the UK pub market is currently worth
over £28 billion and is projected to grow
toapproximately £33 billion by 2028. This
highlights the enduring importance of
pubsin British society and their integral role
in our social fabric.
However, the way people use the pub
continues to evolve. Pubs are no longer just
places for a weekend night out and the
market is no longer just about drinking; it is
about socialising. Increasingly, consumers
are interested in more relaxed, low tempo
visits and as such, pubs now need to cater
to a wider range of occasions, from quick
midweek meals and family celebrations to
casual gatherings and community meet-
ups. In line with this shift, the competitive
landscape has also changed. Pubs no
longer compete with just each other, but
with various other formats for socialising –
such as casual dining, restaurants, bars, fast
food, coffee shops, and more. This shift in
consumer behaviour presents an exciting
opportunity for Marston’s to tap into a
Strategic report Governance Financial statements Additional information
5Marston’s PLC Annual Report and Accounts 2024
A defining year and foundations for future growth
CEO’S STATEMENT
1 Market is forecast to grow at 3% CAGR, according to Mintel.
Fundamental to the implementation of
ourstrategy is the business executing its
market-leading pub operating model. This
means a relentless focus on revenue growth,
cost efficiency and guest satisfaction –
ensuring we strike the right balance
between the three. From a revenue
perspective, we need to give our guests
acompelling reason to visit as well as an
environment that encourages them to stay
longer. On costs, we are committed to
maintaining a lean cost structure, prioritising
labour productivity and disciplined
overhead management. Finally, guest
satisfaction is perhaps most crucial.
Providing guests with a great experience
ensures they return, and, we know those
pubs with the highest guest satisfaction
scores deliver higher year-on-year revenue
growth.
The most visible change to come from our
new strategy will be the creation of five
distinct, customer-focused pub formats:
Locals, Local Sports, Adult Dining, Family,
and Two-Room. These formats are designed
to meet specific customer preferences and
cater to changing usage occasions, from
family meals and casual midweek catchups
to watching the big game with friends and
celebratory gatherings. By clearly defining
these formats, we aim to create five unique
propositions that will provide us with a
balanced pub portfolio and drive increased
customer penetration and footfall, thereby
maximising the revenue opportunity
To support our strategy, we will invest
between 7% and 8% of annual revenue in
the near-to-medium term to enhance our
estate. Approximately one-third will focus
on higher-return investment projects, such
as the transformation of venues to fit our
fiveformats. Complementing this
investment, we will also leverage
technology to strengthen the guest journey
by streamlining order and pay and utilising
data-driven insights for personalised
marketing to drive an increase in revenue
per guest. Technology will also help optimise
costs through improved labour scheduling
analytics and AI-driven stock management,
enabling more predictive and efficient
operations. Marston’s is a people-led
business, but there is undoubtedly a
significant opportunity to complement our
person-to-person offering with technology.
One of the great strengths of Marston’s
isthe balance between management
models. Our managed and partner pubs
are flexible and well-suited to our new
formats. The partnership model, which
Marston’s pioneered in 2008, is popular
among licensees for fostering
entrepreneurship with manageable risk,
and the managed estate will be critical in
our format rollout, whilst also supporting
talent development for our Partner pipeline.
Thisbalanced approach is a key strength
ofthe business and something that will
besupplemented further by targeted
acquisitions, which will be pursued over
time to enhance our portfolio with venues
that align with our differentiated formats.
Further information on each of the value
drivers can be found on page 8, aswell as
materials from our Capital Markets Day
(CMD), which are available onour website:
www.marstonspubs.co.uk/investors. We are
looking forward to sharing updates on our
progress as we begin to embed this strategy
across the business.
Financial performance and
capitalallocation
Our strong 2024 financial performance
already demonstrates that this new chapter
for Marston’s as a focused pub business
iswell underway. While we expect further
momentum as we continue to embed
ourstrategy across the business, this year’s
results showcase some of the early
successes of our approach. Like-for-like
sales growth of 4.8% was driven by higher
guest satisfaction and improved consistency
across our pubs, as reflected in our guest
Reputation score, which increased to
800,from 766 at the end of FY2023.
Underlying EBITDA grewby 13.0% to £192.5
million, while underlying operating pub
profit rose by 17.9% to£147.2 million,
reflecting positive revenue growth and
continued efforts to optimise costs and
enhance operational efficiency. From
continuing operations, our underlying profit
before taxwas £42.1million (2023: £25.6
million) and our statutory profit before tax
was £14.4million (2023: loss of £(30.6)
million).
The sale of our stake in CMBC significantly
bolstered our balance sheet, reducing net
debt well below our £1bn target, ahead of
schedule, to £883.7 million excluding IFRS
16lease liabilities, a decrease of over
£300million from FY2023. This deleveraging
has also provided greater financial flexibility
and supports our capital allocation
priorities. As outlined at our CMD, our
revised capital allocation framework
focuses on long-term organic growth,
further debt reduction, shareholder
dividends, and targeted M&A. While no
dividend will be paid for FY2024, we
recognise its importance to our shareholders
and intend to keep potential future dividend
payments under review.
Current trading and outlook
Current trading has been encouraging,
withcontinued positive momentum carried
over from the summer. We have seen
like-for-like sales growth of 3.9% in the first six
weeks of the financial year, with growth of
2.1% recorded in the first eight weeks of
FY2025. While recent weeks have been
affected by snow and storms, Christmas
bookings are showing strong demand, with
many venues already experiencing high
reservation levels. This positions us well fora
successful trading period during December
as we look to capitalise on the busy festive
season.
Over the near-to-medium term, we expect
to deliver on the targets set out at our CMD:
• Revenue growth ahead of the market
1
• EBITDA margin expansion of 200-300
basis points beyond FY2024
• Over £50 million recurring free cash flow
• >30% incremental returns on investment
capex
The government’s Autumn Budget,
announced on 30 October, introduced
significant changes above expectations to
the National Living Wage, (NLW), National
Minimum Wage (NMW) and National
Insurance contributions. Although this puts
some additional pressure on costs, the
overall package of measures is considered
manageable in the context of the Group’s
CMD targets. We are well positioned to
adapt and continue delivering great
experiences for our guests and remain very
confident in our outlook and our ability to
drive efficiencies in our Operating Model.
FY2024 has been a defining year for
Marston’s, laying strong foundations for
growth, and we will continue to build on
thismomentum as we go through FY2025
embedding our strategy across the business
and wider estate.
Strategic report Governance Financial statements Additional information
6 Marston’s PLC Annual Report and Accounts 2024
CEO’S STATEMENT continued
Our value-creation story – in this section we describe the distinctive ways in which Marston’s creates value for its stakeholders.
Inputs What we do
HOW WE MEASURE VALUE CREATION
How we operate
One of our strengths is the
balance between our pub
management models.
Our estate is comprised of
30% Managed pubs, 58%
Partnership pubs and 12%
Tenanted pubs.
Our managed pubs are
owned and operated by
Marston’s employees. As
well as offering great guest
experiences, they are our
engine room of innovation
and have a critical role to
play in our format rollout.
Our Partnership pubs are
operated by self-employed,
entrepreneurial licensees.
The Partnership model
enables our Pub Partners to
share the risks and manage
some of the biggest costs
involved in running a pub,
such as utilities, whilst taking
a weekly share of the total
revenue. All our Pub Partners
aresupported behind the
scenes by our Pub Support
Centre, offering expert
guidance and support in
core areas such as marketing,
finance and training.
More information on our
management models
canbe found here:
www.marstonscareers.co.uk
Revenues
Revenue increased by 3%
to£898.6 million, progressing
towards our goal of
market-beating revenue
growth.
Sustained margin growth
Underlying EBITDA
(excluding income from
associates) increased by
13% to £192.5 million and
ourunderlying operating
margin grew by over
200basis points resulting
inamargin of 16.4% versus
14.3% in 2023.
Cash flow
Our cash-generative
operating model enables
the reliable delivery of
recurring free cash flow
andfurther demonstrates
our focus on growth.
recurring free cash flow
of£43.6 million for FY2024.
Factors that influence long-term growth:
Market dynamics Sustainability Risks Governance
PAGE 5 PAGE 19 PAGE 35 PAGE 43
For our Guests
Reputation score of
800
No.1
No 1 Pub Company
onReputation
For our People
Employee engagement
score of
8.4
and aggregate
participation rate of
85%
Winner of the Best Large
Pub Employer at the 2024
Publican Awards
For our Pub Partners
Voted No 1 by our Pub
Partners in PCA’s
Tied-tenant survey 2024
No.1
For our Communities
FTSE4Good score of
4.1
For our investors
Growing free cash flow
£43.6m
Net debt reduction to
£883.7m
ALL OUR KPIs CAN BE FOUND ON PAGE 10
Outputs
OUR PEOPLE: Our success is
dependent on attracting and
retaining the right people.
Weensure that we have the
right values, structure and
incentives to foster engaged,
performance-led teams.
OUR GUESTS: Our business model
is based on a forensic study of
pub dynamics and a deep
understanding of our guests
andthe expanding range of
occasions for which they use our
pubs. Our balanced and flexible
estate enables us to evolve our
operating model, formats and
offers to reflect the changing
needs of our guests.
OUR PUB PARTNERS: Our Partners
are most satisfied with Marston’s
when compared to the tenants
of other large pub companies
and this is testament to our
ongoing investment in our
entrepreneurial Pub Partners,
from flexible agreements to
training and support, we enable
them to grow their businesses
and contribute to our shared
vision and goals.
OUR SUPPLIERS: We work closely
with our long-term trusted
suppliers to provide the best
products and services to our
guests. Leveraging powerful
partnerships with key suppliers
isan important enabler of our
strategy.
COMMUNITIES: Our pubs are often
at the heart of the communities
they serve. We actively look for
new ways to enhance the
positive impact we have on our
local communities, from offering
employment opportunities, to
providing relevant offers and
locally executed events and
supporting local causes and
national charities through our
ESG initiatives.
INVESTORS: A stable balance
sheet and a disciplined capital
allocation framework and a
strategy designed to generate
sustainable growth and
shareholder value.
For further information on how
weengage with all key stakeholders
SEE PAGES 14 TO 17
Strategic report Governance Financial statements Additional information
7Marston’s PLC Annual Report and Accounts 2024
Focused on creating value
OUR BUSINESS MODEL
Execute a
market leading
pub operating
model
Capex
tocreate
differentiated
pub formats
Digital
transformation
Leveraging
Marston’s
synergies
in targeted
acquisitions
Expansion of
Managed &
Partnership
models
VISION
To be the UK’s leading
local pub company
PURPOSE
Shared Good Times
STRATEGY
To create a high-margin,
highly cash-generative
local pub company
based on differentiated
formats and a brand
portfolio that is naturally
balanced to appeal
across a range of
consumer segments
OUR KEY VALUE DRIVERS
LFL
Revenue growth
ahead of the
market
200 bps
Sustained EBITDA
margin expansion
200-300 bps
>
30%
incremental
returns on
investment capex
1
Execute a market-leading pub
operating model
• We are focused on relentless execution
and delivering on our market-leading
pub operating model by balancing
revenue growth, cost efficiency, and
guest satisfaction across our estate.
• We aim to set the standard in
operational excellence, ensuring
high-quality service, effective cost
management, and an outstanding
guestexperience.
2
Capex to create differentiated
pub formats
• We have identified the opportunity
to tailor our pub portfolio into five
well-defined pub formats that meet
consumer needs across different
segments.
• We expect these unique propositions
willdrive increased consumer
penetration as we roll out these formats
across our estate.
3
Digital transformation
• We are a people-led business but we
believe there is significant opportunity
to complement what we do with
technology.
• To drive revenue, we will improve
theguest journey and plan to deliver
personalised, data-led interactions
overtime. On costs, our digital strategy
focuses on labour productivity tools and
AI to optimise stock management.
4
Expansion of Managed
and Partnership models
• One of our biggest strengths is the
balance between our different
management models, particularly
thebalance between Managed and
Partnership.
• These formats are incredibly flexible
anda key means of delivering our five
distinct consumer-focused formats and
our market-leading operating model.
30%
Managed
pubs
58%
Partnership
pubs
12%
Tenanted
pubs
5
Leveraging Marston’s synergies
in targeted acquisitions
• Over time, we aim to leverage Marston’s
significant operational strengths,
established brand and scale to unlock
synergies in targeted acquisitions.
• By applying our proven and market-
leading pub operating model and
integrating digital capabilities,
weexpect to drive synergies from
acquisitions that align with our
strategicvision.
£50m
of recurring free
cash flow
generation
Strategic report Governance Financial statements Additional information
8 Marston’s PLC Annual Report and Accounts 2024
Strategy and value drivers
OUR STRATEGY
Our strategy and business
model are underpinned by
three core enablers which
support and help drive our
strategic priorities and reflect
Marston’s unique culture and
how we operate responsibly
and ethically.
KEY ENABLERS
Performance driven team Safely and sustainably
operating the business
The key component parts of our company
purpose ‘Shared Good Times’ are providing
our guests with the best products and
services. One of the ways in which we do
this is to work with our supply chain and key
supply partners to ensure the food and drink
options we offer to our guests are sector
leading. Our commercial marketing and
procurement teams work hard to develop
and maintain productive relationships with
our suppliers to ensure the product range
we offer continues to meet the ever-
changing needs of our guests and that
the products within our supply chain are
consistently of a high standard, both in
terms of quality and sustainability and in line
with our food charter, which deals with
Marston’s ethical sourcing practices and
provenance.
Powerful relationships with key suppliers
and brand owners also help to deliver guest
satisfaction by working in partnership to
provide immersive marketing campaigns
forevents and entertainment for every
occasion across each of our five formats.
This includes fan zones to help our guests
enjoy sporting events in the best
environment.
We are a performance driven business
powered by our People. Our unique culture
and environment empower our teams to go
the extra mile to deliver great results and
strive to be the best they can be. Nurturing
and developing our performance driven
teams is fundamental to the execution of
our strategy and a focus for the year ahead
is reviewing our behaviour framework and
values to ensure they align with and support
the strategic plan.
To help ensure we attract and retain the
right talent, we continue to invest in our
People through programmes like Aspire
which develops our assistant and deputy
managers to become fully qualified general
managers of the future and helps ensure
our People have the right capabilities and
development plans in place. We are also
focused on developing a market leading
performance-based reward system which
rewards, incentivises and recognises our
employees and our PubPartners for
achieving their goals and objectives.
Employee engagement continues to be
one of the key elements of our business
model and we are delighted to be able
toreport a sector leading Employee
engagement score of 8.4 and aggregate
participation rate of 85%.
We are dedicated to delivering best-in-
classhealth and safety standards that are
clearly understood and implemented
across the entire business, irrespective
ofthepub operating model. These involve
adopting a rigorous safety culture and
ensuring commitment from our teams
through training, support and reward,
withachievement of key safety KPIs being
afundamental underpin of all operational
incentive schemes.
Our approach to a sustainable and ethical
operating culture aims to ensure we are
aresponsible and resilient business through
identifying, assessing and managing our
environmental and social impacts. Our pubs
are at the heart of their communities and
contribute to local causes through charitable
endeavours and to local economies
through offering employment and training
opportunities.
Powerful supplier partnerships
Further information on all aspects of our
approachto operating safely and sustainably
inour four core pillars of Planet, People, Product
and Policy can be found in our Impact Report
available at www.marstonpubs.co.uk.
Strategic report Governance Financial statements Additional information
9Marston’s PLC Annual Report and Accounts 2024
Strategy and key enablers
OUR STRATEGY continued
10.1%
LfL
4.8%
LfL
2022 2023 2024
Total revenue (£m)
799.6
872.3
898.6
(
1.4)%
LfL
2022 2023 2024
731
800
766
Guest Reputation track record
2022 2023 2024
1
Underlying EBITDA (£m) & Underlying
EBITDA margin
(%)
159.6
170.3
192.5
19.5%
21.4%
20.0%
Underlying recurring free cash flow (£m)
2022
2023
2024
2
(3.1)
(38.5)
43.6
2022 2023 2024
Our Pubs at 5* EHO (%)
83.6
92.9
94.1
2022 2023 2024
Net debt (excluding lease liabilities) (£m)
1,216
1,185
883.7
YOY revenue growth
0.3%
3.0%
5.4%
5.7%
7.8%
900+850800750<750
Our key financial and operational metrics are set out below. These metrics track our progress towards our vision
of being the UK’s leading local pub company and are linked to how we are remunerated.
1
LFL Revenue growth greater
than the market
REM
We aim to continue our track record of
delivering growth above industry rates.
2
Focus on guest Reputation score
REM
Guest satisfaction is a critical metric which we measure through our Reputation score.
There is a clear link between our Reputation score and revenue growth.
3
Sustained EBITDA margin
expansion
REM
Delivering cost and operational efficiencies
to support sustained margin growth. The
journey to margin expansion has already
begun with a significant improvement YoY.
4
Growing free
cash flow
REM
Revenue growth and improving margin
generates free cash flow and supports
delivery of our strategy to be highly cash-
generative.
5
Safely and sustainably
operating the business
All of our pubs to be 5* EHO.
6
Material reduction in debt
Transferring debt to equity in conjunction
with strategic growth to create shareholder
value.
We’ve made some changes to our KPIs
this year to align with our strategy. More
details on previous KPIs can be found
onpage 148.
Strategic report Governance Financial statements Additional information
10 Marston’s PLC Annual Report and Accounts 2024
A clearly defined growth strategy
OUR KEY PERFORMANCE INDICATORS
“Cash flow significantly
improved and net debt
reduced ahead of target.”
HAYLEIGH LUPINO
CHIEF FINANCIAL OFFICER
Revenue
Revenue increased by 3% to £898.6 million
(2023: £872.3 million), demonstrating the
appeal of our predominantly community-
based estate. Our expertise in managing
local pubs, along with our strategic
commitment to delivering exceptional
guest experiences and enhancing our
Reputation score, has supported this
growth. Like-for-like sales were up 4.8%
versus FY2023, with like-for-like revenue
growth outpacing the market, and seeing
growth in both food and drink sales.
Total retail sales in the Group’s managed
and partnership pubs for the 52-week
period increased by 3.6% to £835.1 million
(2023: £806.1 million). We operated 157 pubs
under the tenanted and leased model
generating revenues of £34.0 million
(2023:£39.5 million). As outlined at our CMD,
it remains our intention to strategically
expand our managed and partnership
models over the medium-term.
Accommodation sales were broadly stable
at £34.9million (2023: £35.6 million), with
continued demand for UK staycations.
Profit
Underlying operating profit from
continuingoperations increased by 17.9%
to£147.2 million (2023: £124.8 million).
Underlying operating margins grew by over
200 basis points compared to last year,
fromcontinued focus on driving efficiencies
in energy, simplification and labour costs
resulting in an enhanced margin of 16.4%
(2023: 14.3%) and reflecting strong progress
in our strategic attempts to drive margin
expansion. Total operating profit from
continuing operations was £151.7 million
(2023: £90.2 million).
Underlying EBITDA from continuing operations
increased by 13.0% to £192.5 million (2023:
£170.3 million). The EBITDA margin was 21.4%,
marking a significant increase on last year
(2023: 19.5%).
Underlying profit before tax from continuing
operations increased to £42.1 million
(2023:£25.6 million) and statutory profit
before tax from continuing operations was
£14.4 million (2023: loss before tax of
£(30.6)million), reflecting the impact of
non-underlying items.
The difference between underlying profit
before tax and profit before tax from
continuing operations is a net non-underlying
charge of £27.7 million, the details of which
are set out below.
The statutory profit from continuing
operations was £17.5 million (2023: loss of
£(19.2) million). The statutory loss from both
continuing and discontinued operations
was £(18.5) million (2023: £(9.3) million).
Non-underlying items
There is a net non-underlying charge of
£27.7 million before tax and £15.6 million
after tax from continuing operations.
The £27.7 million charge primarily relates to
a £32.2 million net loss in respect of interest
rate swap movements. This principally
relates to interest rate swaps the Group
entered into to fix the interest rate payable
on the floating rate tranches of its
securitised debt. Other non-underlying
items comprise £0.7 million of reorganisation,
restructuring and relocation costs and
£0.5million of additional costs from the
change in CEO, offset by £5.7 million of
netimpairment reversals of 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.
The tax credit relating to these non-underlying
items is £12.1 million.
There is a non-underlying charge of
£36.5million from discontinued operations
in respect of CMBC which is detailed in the
disposal of and share of associate section
on page 12.
Taxation
The underlying tax charge was £9.0 million
(2023: £3.5 million). This gives an underlying
tax rate of 21.4%. The effective rate is lower
than the standard rate of corporation tax
primarily due to additional amounts upon
which tax relief is available and a prior year
tax credit.
Strategic report Governance Financial statements Additional information
11Marston’s PLC Annual Report and Accounts 2024
Strong financial performance
GROUP OPERATIONAL AND FINANCIAL REVIEW
The total tax credit was £3.1 million (2023:
£11.4 million) on total profit before tax from
continuing operations of £14.4 million
(2023:loss of £(30.6) million), with a negative
effective tax rate of (21.5)%. In combination
with the underlying items, the recognition
ofcapital losses, previously derecognised,
arising from the upward revaluation of land
and buildings has resulted in the negative
effective tax rate.
Total tax contribution
(£m)
VAT
100.2
Employee
payroll taxes
33.2
Business
rates
24.2
Employer
payroll taxes
14.2
Machine games
duty, corporation
tax & other
4.9
Earnings per share
Total basic earnings per share on continuing
operations were (2.8) pence (2023: (3.0) pence
loss per share). Basic underlying earnings
per share on continuing operations were
5.2pence per share (2023: 3.5 pence per
share).
Capital expenditure
Capital expenditure was £46.2 million in
theyear (2023: £65.3 million). Capital was
predominantly focused on maintenance
ofboth the estate and operational systems
during the year. We expect that capital
expenditure will be around £60 million
in2025, as we move towards the 7-8% of
revenue target.
Property, net assets and disposals
The Group conducts an annual external
valuation of its properties, with all pubs
inspected on a rotating basis. Approximately
one-third of the estate undergoes physical
inspection each year, while the remainder
issubject to a desktop valuation. In July
2024, Christie & Co carried out an external
valuation, the results of which are reflected
in the full year accounts.
The carrying value of the estate remains
at£2.1 billion (2023: £2.1 billion). Following
the valuation and a leasehold impairment
review, on a like-for-like basis there was
anincrease of approximately £57 million
infreehold and leasehold fair values for
properties held as at the revaluation date,
along with a £5.7 million reversal of
impairment of freehold and leasehold
properties in the income statement.
Net assets increased to £654.8 million
(2023:£640.1 million), with a net asset value
per share of £1.03 (2023: £1.01).
During the year, the Group generated
£46.9million in net proceeds from non-core
pub disposals, with a further £4.0 million
expected from transactions that were part
of the FY2024 strategic disposal programme
and completed within the first two months
ofFY2025. Disposal proceeds were in line
with book value.
Disposal of and share of associate
– Carlsberg Marston’s Brewing
Company (CMBC)
On 8 July 2024, the Group announced the
sale of its remaining non-core brewing
assets to create a business entirely focused
on pubs, with a binding agreement to sell
the whole of its 40% interest in CMBC for
£206.0 million, or £202.6 million net of
transaction fees. The transaction completed
on 31 July 2024.
Following the Group’s disposal of its 40%
share in the joint venture, income from
associates has been recognised in
discontinued operations.
Impairment indicators on the carrying
valueof the investment immediately prior
todisposal were identified, including the
result of the net disposal proceeds being
less than the carrying value of the
investment. The Group has recognised an
impairment to the carrying value of the
investment immediately prior to disposal of
£8.0 million. The amount of the impairment
in this case is a judgemental matter due
tothe circumstances at hand, including
uncertainty over the future cash flows of
CMBC. As a result, the impairment has
beendisclosed as a key source of
estimation uncertainty. The remaining
difference between the newly impaired
carrying valueof the investment and the
net disposal proceeds represents a loss on
disposal of £11.9 million. Further details are
provided innote 8 on page 107 of the
Financial statements.
The statutory result in discontinued
operations is a loss of £(36.0) million
(2023:profit of £9.9million). Underlying
income from associates is £0.5 million
(2023:£9.9 million). Non-underlying items
include the two non-underlying items
disclosed in our H1results, which have
beenupdated for taxdifferences, of
£(14.0)million share ofCMBC’s ale brand
impairment and £(2.6)million share of a
CMBC onerous contract provision, which
together with the underlying income from
associates are the Group’s share of the
statutory profit after tax generated by
CMBC. Other non-underlying items are
theimpairment to the carrying value
oftheinvestment in associate prior to
disposalof£8.0 million and loss on disposals
of £11.9million.
Prior to the disposal, dividends from
associates of £13.8 million were received
inthe year (2023: £21.6 million).
Pensions
The balance on our final salary scheme
wasa £13.1 million surplus at 28 September
2024 (2023: £12.9 million surplus). The net
annual cash contribution of c.£6million
willnot continue in FY2025 and onwards.
The company will continue to paythe
administrative fees associated with the
scheme.
Strategic report Governance Financial statements Additional information
12 Marston’s PLC Annual Report and Accounts 2024
GROUP OPERATIONAL AND FINANCIAL REVIEW continued
Dividend
As set out at the CMD, our capital allocation
framework is focused on delivering sustainable
long-term value for shareholders. Going
forward, the Board willbalance debt
reduction and strategic growth investments
with the goal of creating a more financially
robust business that can ultimately support
shareholder returns. At present, there are
restrictions on the ability of the business
todistribute dividends which arise as a
resultof both the legal entity structure and
securitisation structure. Refinancing of our
capital structure would provide greater
optionality in this respect and, whilst there
isno immediate action set to be taken,
thisremains under review. Dividends form
acore part of our capital allocation
framework, and whilst nodividend will
bepaid in respect of FY2024, the Board is
cognisant of the importance of dividends
toshareholders.
Cash flow
Cash flow was significantly improved on the
prior year with an operating cash inflow of
£207.4 million (2023: £141.2 million). Excluding
the CMBC dividend, operating cash inflow
was £193.6 million (2023: £119.6 million).
Net interest costs including bank and
swaptermination fees were £103.8 million
(2023: £92.8 million) and capital expenditure
was £46.2 million (2023: £65.3 million),
resulting in recurring free cash flow of
£43.6million (2023: outflow of £(38.5) million).
Recurring free cash flow in FY2024
benefitted from lower levels of capital
expenditure and taxation and going
forward we continue to target recurring
freecash flow of over £50 million a year.
Taking into account disposals proceeds
received of £46.9 million (2023: £51.3 million),
CMBC dividend of £13.8 million (2023:
£21.6million) and disposal of 40% interest
inCMBC of £205.5 million (2023: £nil million),
net cash flow for the period was £309.8 million
(2023: £34.4 million).
Debt and financing
Net debt, excluding IFRS 16 lease liabilities,
was £883.7 million, a reduction of
£301.7million (2023: £1,185.4 million).
Totalnet debt of £1,257.4 million (2023:
£1,565.8million) includes IFRS 16 lease liabilities
of£373.7 million (2023: £380.4 million).
The Group has made significant progress
indebt reduction during the year; pre-IFRS
debt/EBITDA leverage reduced to 5.2x
(2023: 8.0x). Leverage including IFRS 16
reduced to 6.5x (2023: 9.2x).
During the year, we successfully secured
anamendment and extension to our
banking facility, which was due to expire in
January 2025, and during our interim results
announced £340.0 million of funding.
Following the disposal of our 40% share in
CMBC, the net proceeds have been used
torepay debt and the bank facilities have
been adjusted accordingly. The revised
bank facility is for £200.0 million, of which
£35.0 million was drawn at year-end,
maturing in July 2026, with the potential
toextend beyond this.
There are one-off transaction costs of
c.£3.6million and the costs of the facilities
arevariable: to be determined by the
levelof leverage, or drawings, from time-to-
time alongside changes in the SONIA rate.
£60million of the facilities is hedged.
The Group’s financing, providing an
appropriate level of flexibility and liquidity
for the medium term, comprises:
• £200.0 million bank facility to July 2026 –
at the year-end £35.0 million was drawn
providing headroom of £165.0 million
andnon-securitised cash balances
of£11.5 million
• Seasonal overdraft with current limit
of£5-£20 million, depending on dates
– unused at the period end. The seasonal
overdraft is expected to reduce to
£5-10million in the near future
• Long-term securitisation debt of
£560.2million – at the period end none
ofthe £120.0 million securitisation liquidity
facility was utilised
• Long-term other lease-related
borrowings of £338.4 million
• £373.7 million of IFRS 16 leases
The vast majority of our borrowings are
long-dated and asset-backed, including
the securitisation debt of £560.2 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 28 September 2024
was 6.45%.
The loan to value of its debt, which is
improving year-on-year, is currently 50% for
debt excluding IFRS 16 lease liabilities and
49% for the securitisation debt.
The securitisation is fully hedged to 2035.
Other lease related borrowings are index-
linked capped and collared at 1% and 4%.
There is now one £60 million floating-to-fixed
interest rate swap against the bank facility:
£60 million is fixed at 3.45% until 2029.
Reflecting the reduced level of our bank
borrowings, we exited another £60 million
forward floating-to-fixed interest rate swap
in September 2024.
In summary, we have adequate cash
headroom in our bank facility to provide
operational liquidity. Importantly, c.100%
ofour medium to long-term financing is
hedged, with known or fixed costs thereby
minimising any exposure to interest rate
movements.
Strategic report Governance Financial statements Additional information
13Marston’s PLC Annual Report and Accounts 2024
GROUP OPERATIONAL AND FINANCIAL REVIEW continued
Our stakeholders:Engaging with stakeholders delivers
better outcomes for our business,
which are fundamental to our
long-term success.
Section 172(1) 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, whilst also
considering the likely consequences of any
decisions made over the long term and
theneeds and interests 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.
PEOPLE
We’re a people-powered business and our
performance driven teams are committed
todelivering great experiences.
GOVERNMENT BODIES
ANDREGULATORS
Engaging with those that govern and
regulate our business and how we operate
supports our efforts to achieve consistently
high standards of business ethics and
corporate governance.
INVESTORS
Our shareholders, bondholders and banking
group provide essential sources of capital to
support the delivery of our strategy. In turn they
expect us to manage their investment responsibly.
PUB PARTNERS
Our Partners are responsible for
operating more than half of the pubs
within our estate and they look to us to
provide innovative, flexible operating
agreements, together with the right
support and training to grow their
businesses.
COMMUNITIES AND
THEENVIRONMENT
Our pubs are the heart of local
communities, providing a local space
for Shared Good Times and special
occasions. A key enabler of our strategy
is to ensure we operate safely and
sustainably for the benefit of all our
stakeholders, including 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
Enabling Shared Good Times for our
guests, by providing the best products
and service, in a great environment.
Strategic report Governance Financial statements Additional information
14 Marston’s PLC Annual Report and Accounts 2024
Engagement with our stakeholders
STAKEHOLDER ENGAGEMENT & SECTION 172(1) STATEMENT
PEOPLE
The Board recognises that the success
ofourbusiness and delivering the strategy
depends on attracting and retaining the
right people and incentivising them in the
right way, while considering the impact that
decisions have on our People, wherever
possible. During FY2024, Bridget Lea, our
Designated Non-executive Director for
workforce engagement represented the
voice of our People in the boardroom by
hosting an engagement forum attended
bya number of employees with different
roles and backgrounds from a number of
our pubs and our Pub Support Centre. The
agenda for the session was set by selecting
key themes or topics that had been identified
as being important to the majority of the
wider workforce through Your Voice – our
employee engagement survey – and this
year included mental health at work
andcollaborative ways of working.
The collective views of the forum were then
discussed at a Board meeting, providing a
valuable link between our People and the
Directors. In the same session, the Board
was also taken through and helped shape
the next stage of our Diversity & Inclusion
strategy, including the launch of our ‘Care
to Share’ campaign which encourages
ourpeople to share their ethnicity, to help
us understand and measure the diversity of
our organisation and highlight, and direct,
our initiatives.
Our Your Voice survey had a record
participation rate this year with 85%
aggregate participation rate and an overall
engagement score of 8.4 (2023: 8.2). Your
Voice is well-embedded in our business,
enabling us to identify our strengths and
areas of focus. Quarterly reports from
YourVoice are submitted to, and discussed
by the Executive Committee.
During the reporting year, the Board also
engaged with a wide cross-section of
ourPeople and Pub Partners in more
informal settings by spending days ‘in trade’
and attending Board meetings and Board
dinners in our pubs. The Audit Committee
also received a report on any matters
reporting through ‘Speak up’, our
whistleblowing platform, enabling the
Board to monitor culture and any emerging
trends.
We believe that, in combination, these
methods of engagement help to build and
maintain trust and communication whilst
providing our People with forums and tools
to influence change and for the Board
tounderstand the impact their decisions
have on our people through a number
ofdifferent lenses.
GUESTS
The Board recognises that guest satisfaction
is fundamental to the long-term success
ofthe Company. The way in which we
engage with our guests and measure
satisfaction is through the Reputation
platform. Reputation provides a ‘one stop
shop’ for all guest feedback, combining
allsocial media platforms, our own internal
guest satisfaction survey and any direct
communications we receive. This provides
astreamlined, efficient way of engaging
with our guests. It also enables us to check
and, where necessary, react to guest-facing
business decisions and analyse key themes
and trends, while putting action plans in
place to address any issues that might arise.
The platform also enables the Board to
consider guest satisfaction relative to many
of our competitors as the platform provides
an overall score considering a wide range
of data points, both at an individual pub
level and at aggregate Group level. The
aggregate Reputation score is reported to
the Board each month, together with key
actions or areas of focus for the management
team. This year our Reputation score was
800, an improvement from last year.
The evolving nature of consumer needs
andexpectations also heavily influenced
the Board’s deliberations when considering
the Group’s strategy. Further information
onhow the Board considered Section 172(1)
in their strategic decision-making processes
can be found on page 17.
PUB PARTNERS
Our Pub Partners are an important
stakeholder group, and their interests
(andthe interests of their employees) are
considered as part of the Board’s discussions.
Our Pub Partners are encouraged to
complete a bi-annual Your Voice survey
giving them an opportunity to comment
anonymously comment on all aspects of
partnering with Marston’s. Their overall
engagement score forthe year was 8.2 with
an aggregate participation rate is 84%.
Similarly to the YourVoice results for our
employees, the results of the Pub Partner
survey are considered by the Executive
Committee each quarter and reported to
the Board atleast annually.
The Board continues to support our
Executive and management teams who
work collaboratively with our Pub Partners
on an ongoing basis to continue to improve
and innovate. The evolution of our partnership
offering formed part of the strategic review
and further information can be found
onpage 17.
Strategic report Governance Financial statements Additional information
15Marston’s PLC Annual Report and Accounts 2024
STAKEHOLDER ENGAGEMENT & SECTION 172(1) STATEMENT continued
COMMUNITIES AND
THEENVIRONMENT
The Board continues to recognise the
importance of the local communities in
which we operate. Our vision of being the
UK’s leading local pub company is a simple
statement depicting both the Company’s
projected goal and the significance of
thelocal community in achieving this.
TheBoard understands that everything we
do can have an impact on all communities
and the environment, and operating ‘safely
and sustainably’ is akey enabler of our
strategy. Our Impact Report includes a
number of key targets where we believe we
can make meaningful contributions to both
local communities and the environment in
each of the four pillars of action: Planet,
People, Product and Policy. Further
information can be found on page 19 and
in our Impact Report, which can be found
at www.marstonspubs.co.uk.
SUPPLIERS
The interests of our key suppliers are
regularly considered as part of the Board’s
discussions on ways to improve operational
performance. The importance of strong
supply partners was highlighted as part
ofthe development of the strategy, with
‘Powerful Supplier Partnerships’ being
another key enabler.
During the year the Board approved
andreceived updates on key contract
renegotiations with key suppliers, including
the long-term distribution agreement with
CMBC following the sale of our remaining
interest in the partnership with Carlsberg.
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 the right products and service for our
guests and Pub Partners. Further information
on how we engage with our supply chain
on important topics such as ethical sourcing
can be found in our Impact Report.
INVESTORS
The Board continues to strive to ensure
thatthe Group provides fair, balanced and
understandable information that enables
allour investors to understand our strategy
and vision and have clarity over our
financial and non-financial performance.
An analysis of the Group’s investors by type
can be found on page 146.
In October 2024, we held our first Capital
Markets Day (CMD) since the pandemic,
inperson and via webcast. At the CMD,
ourCEO, JustinPlatt, outlined the results
ofadetailed strategic review and
communicated the Group’s evolved
strategy and updated metrics as a pure
play hospitality business focused entirely
onpubs. The CMD also included an
introduction from the Chair and
presentations from the CFO on financial
measures and the Chief Development
Officer on format expansion, followed by
alive Q&A and an opportunity for guests
tosample food and drink from our award-
winning menus. Arecording of the CMD
isavailable at www.marstonspubs.co.uk.
This year we have also strengthened our
investor relations team who are increasingly
becoming an important link between the
investment community and the Board,
providing frequent feedback and reports,
notably after financial results and other
keyactivities.
The Chair and members of the Board (as
appropriate) continue to make themselves
available to meet with institutional investors
and seek to understand and prioritise
theissues that matter most to them. The
Company Secretary continues to have
regular communication with retail investors
and institutional investors on certain
matters, including ESG and sustainability.
Many of our People are also our shareholders
and we encourage their participation
inemployee share schemes.
GOVERNMENT BODIES
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. The Board is regularly
updated on compliance with regulations
and readiness for compliance with new or
emerging laws and regulations that affect
the Company.
Strategic report Governance Financial statements Additional information
16 Marston’s PLC Annual Report and Accounts 2024
STAKEHOLDER ENGAGEMENT & 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 following
explains how the Directors consider
Section 172(1) in their decision-making
process.
CMBC
A key matter considered by the Board
during the year was the disposal of our
remaining 40% stake in CMBC. TheBoard
considered what effect this transaction
could have on our investors and banking
partners particularly in relation to
long-term value creation anddebt
reduction. The risk factors
andopportunities were outlined by the
Company within its RNS announcement
released on 8 July 2024. The Board also
considered the potential impact of the
transaction on our guests, Pub Partners
and suppliers in connection with the
long-term pub supply agreement with
CMBC, which was updated as part of
thetransaction.
Strategic review
The strategic review during the year set out
the Company’s new vision, purpose and
strategy, and we have explained here some
of the ways the Directors discharged their
Section 172(1) duty as part of thereview:
Our Guests: The evolving nature of
consumer needs and expectations heavily
influenced the Board’s deliberations when
considering the strategy.
The key value drivers underpinning the
strategy were developed as a direct result
of a detailed consumer study undertaken
by the Executive team, that considered the
various ways in which market and consumer
dynamics translated into opportunities for
growth. This led to the development of
fivedistinct pub formats which meet an
expanding range of occasions leading to
enhanced customer recognition and growth.
Our People: The Board recognises that
organisational capability and talent is
acritical factor in the success of
organisational change and the Board
considered this aspart of the strategic
review, including adding new talent and
roles to the Executive team in critical
areas. Ensuring that we have an
organisational and reward structure
which supports ‘performance driven
teams’ is a key enabler of the strategy.
Our Pub Partners: Our Pub Partners are
akey part of our business, and the Board
continues to support our Executive
andmanagement teams who work
collaboratively with our Pub Partners
onan ongoing basis to continuously
improve and innovate. As part of the
strategic review, the Board considered
ways to further strengthen our Partnership
model providing increased flexibility,
appeal and support for our Pub Partners.
Strategic report Governance Financial statements Additional information
17Marston’s PLC Annual Report and Accounts 2024
Section 172(1) in action
STAKEHOLDER ENGAGEMENT & SECTION 172(1) STATEMENT continued
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, Impact 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 them
Environmental matters
• Our sustainability strategy
• Taskforce on Climate-related Financial Disclosures (TCFD) report
• Environment Policy
PAGE 19 AND OUR IMPACT REPORT
PAGE 20
Our People
• Our ‘Speak Up’ system and Whistleblowing Policy
• Gender Pay Gap report
• Health & Safety Policy and Food Safety Policy
• Equality, Diversity & Inclusion Policy
• Our Corporate Hospitality & Gift Policy
• Family Leave Policy
PAGE 60 AUDIT COMMITTEE REPORT
WWW.MARSTONSPUBS.CO.UK
Human rights
• Human Rights Policy
• Our Food Supplier Charter
• Our Modern Slavery Statement
DIRECTORS’ REPORT PAGE 77
WWW.MARSTONSPUBS.CO.UK/RESPONSIBILITY
WWW.MARSTONSPUB.CO.UK
Social matters
• Our sustainability strategy
• The Pubs Code
• Our Food Supplier Charter
• Our Procurement Policy
PAGE 19 AND IMPACT REPORT
PAGE 60 AUDIT COMMITTEE REPORT
WWW.MARSTONSPUBS.CO.UK/RESPONSIBILITY
Anti-bribery and corruption
• Our Food Supplier Charter
• Our Anti-Bribery and Corruption Policy and Anti-Money Laundering Policy
• Our Procurement Policy
• Our Fraud Policy
WWW.MARSTONSPUBS.CO.UK/RESPONSIBILITY
Business model
• Business model – what we do, our key relationships and the value that is created
PAGE 7
Principal risks and impact
of business activity
• Risk and risk management and our principal risks and uncertainties
• Audit Committee report
• Review and publication of our revised Food Supplier Charter
• Data Protection Policy and Data Privacy notices
PAGES 37 TO 41
PAGES 57 TO 60
WWW.MARSTONSPUBS.CO.UK/RESPONSIBILITY
WWW.MARSTONSPUBS.CO.UK
Non-financial KPIs
• 5* EHO and Reputation scores
PAGE 10
OUR POLICIES AND IMPACT REPORT
CAN BE FOUND ON OUR WEBSITE
WWW.MARSTONSPUBS.CO.UK
Strategic report Governance Financial statements Additional information
18 Marston’s PLC Annual Report and Accounts 2024
NON-FINANCIAL & SUSTAINABILITY INFORMATION STATEMENT
Our sustainability approach aims to ensure we are a responsible and
resilient business through identifying, assessing and managing our
environmental and social impacts. As a local pub company, with a national
reach, we’re uniquely placed to help make and shape positive change
forall our stakeholders, including the planet, our most fragile stakeholder.
As part of the review of strategy, we also
revisited our sustainability strategy toensure
it remains connected to the coreof what
we do, while supporting the Company’s
vision and purpose. Our people strategy
and commitment to operating safely and
sustainably are two of the three key
enablers and we remain committed to
doing more in our four priority areas: Planet,
People, Product and Policy. These priority
areas, or ‘4P’s’, are the central thread of
oursustainability strategy, with a clear
connection to our purpose, and where we
believe we can have the biggest impact.
As our strategic roadmap develops, we will
continue to review what is most important
toour business and our stakeholders, and
ensure that our targets, milestones and
initiatives are the right ones to get us there.
Our 2024 Impact Report, previously known
as our Insight Report, is a statement of our
aims, targets and intentions, and includes
our focus areas and the stories to support
our initiatives. Included in our report details
the progress ofour targets and the activities
from each of the four pillars during the year.
Some of our targets include:
• To achieve Net Zero by 2040
• 50% reduction in food waste by 2030
• To promote energy from renewable
orself-generated sources
• To reduce the volume of water we
consume across our estate every year
• To achieve an employee engagement
score of 8 or more
• All of our pubs to be 5* EHO
• Maintain FTSE4Good certification
More information on all our targets, the
progress we are making and other positive
impacts can be found in our Impact Report
for 2024.
CORE PILLARS OF
OURSUSTAINABILITY
STRATEGY
READ OUR IMPACT REPORT ONLINE
ATWWW.MARSTONSPUBS.CO.UK
Strategic report Governance Financial statements Additional information
19Marston’s PLC Annual Report and Accounts 2024
Shared responsibility
SUSTAINABILITY
The following pages set out the
potential impacts, risks and
opportunities of climate change
onour business and our responses
tothe TCFD disclosures. Considered
inthis report are the current and
projected climated related financial
impacts as we seek to progress to
Net Zero. We also explain the steps
we have taken so far to reach
NetZero, the targets adopted and
the Company’s forward plan.
Summary
The Group recognises the need for
coordinated action, both within our own
operations and in collaboration with
industry partners, to reduce the UK
hospitality sector’s carbon footprint and
ourcombined impact upon nature. As part
of our sustainability strategy, we have a
clear and realistic pathway to Net Zero,
targeting Net Zero across ourown operations
(Scopes 1 & 2) and our supply chain
(Scope3) by 2040, which is inline with our
pub industry peers.
We have mapped our total greenhouse gas
(GHG) emissions, including those emanating
from our supply chain, which are responsible
for over 80% of the Group’s total emissions.
This helps us to identify specific goods and
services that we receive which are responsible
for the highest emissions, enabling valuable
conversations with our supplier partners
around carbon reduction initiatives. A key
activity of our Planet pillar is adapting our
pubs to move away from gas to electricity.
Our future procurement strategy will include
acquiring electricity generated from
sustainable sources, such as solar, wind and
water. Weare also focusing on reducing our
water usage across our estate and initiatives
to drive recycling and minimise food waste.
More information on all our activities can be
found in this year’s Impact Report available
at: www.marstonspubs.co.uk.
Preparing for climate change
Carbon neutrality, the reduction of the
emissions directly under our control
(Scopes1 & 2), can be achieved through
minimising waste from our operations, to
transitioning our kitchens from gas to fully
electric, moving to lower carbon heating
sources, and securing energy supply from
renewable sources.
The conversion of our kitchens from gas
toelectricity began two years ago and is
progressing well. The conversion programme
principally involves the modernisation
ofourequipment, replacing equipment at
the end of its life with new, more sustainable
alternatives, completed within normal
cycles of equipment replacement. We
arealso making positive progress on our
commitment to reduce food waste by
50%across our operations by 2030, already
achieving a 32% reduction through food
waste initiatives.
Sourcing ample renewable energy is a key
step to achieving Net Zero. We will only
contract renewable energy prices when
itiscommercially viable for our business.
Thevolume of green energy available for
purchase on the energy market is outside
our control; however, we are committed to
keep evaluating the market to find supply
deals which are right for our business.
Our roadmap to Net Zero is based upon an
assumption that sufficient green energy is
available for our business at the right price.
In the meantime, the lack of volume in
thismarket doesn’t impede our plans to
transition to electrification. We consider
thatrenewable energy supply in the UK will
continue to increase and that consequently
green energy prices will fall. We are confident
that the re-fit of our kitchens from gas
totransition to electric can largely be
completed within normal cycles of
equipment replacement.
We have re-evaluated our financial
forecasting since last year. Planned and
known costs are reflected in our short to
medium-term forecasting as appropriate.
For instance, the cost of preparatory work
for conversion to electrical equipment is
reflected in our five-year plan and our
capex refurbishments include, as standard,
works to reduce carbonemissions and
operating costs atapub level.
Weather impact
Our analysis has identified that he most
significant potential impact of climate
change on our business is flooding. Flooding
across the estate over the past 10 years has
equated to £2 million worth of damage. We
now have two pubs that consistently flood
and experience some disruption to trade.
However, over the entire estate there seems
to be no discernible trend in the costs
caused by flooding.
TCFD disclosure compliance
This year we have sought to improve our
reporting on Scope 3 emissions and have
worked with the Zero Carbon Service on the
identification and quantification of indirect
emissions. The full financial impact of climate
change and Net Zero cannot presently
bequantified, however we believe this will
become clearer in future years as the costs
and opportunities become more certain.
We have sought to reflect a more detailed
appraisal of the financial impact of climate
change in our short to medium-term plans
while forecasting where possible – for
instance, the additional costs of converting
our kitchens, where known.
Climate change viability
The risks of climate change are considered
by management during the year to prepare
for our TCFD reporting, including the route
for achieving Net Zero and the impact on
our financial modelling. Our Planet steering
committee meets to consider progress made
totackle climate change, to plan forthe
next steps and consider the relevant risks.
The climate change risks as they currently
present themselves are not significant
enough to impact our viability, meaning
that we do not consider that our direct
operations are subject to high climate-
related risk in the short tomedium-term.
Fundamentally we are well placed to
manage climate-related challenges, seize
the associated opportunities and adapt.
We remain steadfast in our commitment to
collaborate with our supplier partners and
industry peers to decarbonise while continuing
our work with external experts to broaden
the scope of our sustainability efforts and
further improve our TCFD disclosures
year-on-year.
Strategic report Governance Financial statements Additional information
20 Marston’s PLC Annual Report and Accounts 2024
SUSTAINABILITY continued
Taskforce on Climate-related Financial Disclosures (TCFD)
SUMMARY OF TCFD DISCLOSURES
This report has followed the guidance set out in the Task Force on Climate-
related Financial Disclosures (June 2017) and the implementation advice
(October 2021). This disclosure also complies with the requirements of the
Companies Act 2006 as amended by the Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022.
At the time of publication, we have made climate-related financial disclosures consistent
with the TCFD recommendations in this 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 uncertainty or a lack
of reliable data, 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. We will continue to review this year on year and disclose
appropriately when the data becomes more reliable.
• Metrics and targets (disclosure (b) – Scope 3 emissions). Our focus on scope 3 emissions
has been to understand our emissions and the key hotspots within our supply chain.
Sofarthis has focused on the data collected for FY2023. Our intention in future years
istoenhance this information gathering process in order to report on the current
financial year.
TCFD recommended disclosures and our progress
Theme TCFD recommended disclosure 2024 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. More information on these can be found in our Principal
Risks and Uncertainties section of this report.
PAGE 23
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 to implement our business strategy, including those
aspects which connect to climate-related risks and opportunities.
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.
Meetings are held with the risk owners, during the year to assess the risks and the
assessments are re-evaluated as conditions change, to consider whether the risk
couldhave a material financial impact on the business.
PAGE 23
b. Describe the organisation’s processes for
managing climate-related risks
Marston’s strategic priorities are linked to the effective control of climate-related risks
andopportunities.
c. Describe how processes for identifying,
assessing, and managing climate-related risks
are integrated into the organisation’s overall
risk management
The environmental risks are assessed in terms of their potential to significantly impact
onour business in the short, medium or long-term timeframe. We consider how the
implementation of identified mitigating factors can support our strategic resilience
toclimate change.
Recommendations against which we have been
able to fully disclose.
Recommendations against which we have made significant
progress and plan to enhance our disclosure further.
Strategic report Governance Financial statements Additional information
21Marston’s PLC Annual Report and Accounts 2024
SUSTAINABILITY continued
TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
Theme TCFD recommended disclosure 2024 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
Our principal risks consider climate-related risks.
PAGE 24
b. Describe the impact of climate-related risks
and opportunities on the organisation’s
businesses, strategy, and financial planning
This report explains 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 believe this will become clearer in future years as the costs and opportunities
become more certain. It is expected that more certainty about the financial cost of
converting our premises to electric rather than gas and oil will be forthcoming in future
years when the market for renewable energy expands.
We have sought to reflect a more detailed appraisal of the financial impact where
possible in our five year plan, such as the preparations to convert our kitchens to electric.
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 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, 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 our direct operations are at high climate
related viability riskin the short to medium term.
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 33
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 its Scope 1 & 2 emissions.
Our focus on Scope 3 emissions has been to understand emissions and key hotspots
within our supply chain. To date this has focused upon the data collected for FY2023.
Ourintention in future years is to enhance the information-gathering process to be able
toreport on the most recent full financial year.
Purchased food and drink make up the highest proportion of our Scope 3 emissions.
Weare beginning to work with our suppliers to understand their emissions and where
changes could be made to reduce scope 3 emissions within the supply chain. We have
now engaged with our largest food suppliers to understand their challenges and the
projects they are undertaking to reduce emissions.
c. Describe the targets used by the organisation
to manage climate-related risks and
opportunities and performance against targets
Our targets include Net Zero by 2040, our commitment to reducing food waste by 50%
by2030, and our plans to move towards the electrification of the estate. We hope to
provide more information in future years as climate-related costs and opportunities
become more certain.
PAGE 34
Recommendations against which we have been
able to fully disclose.
Recommendations against which we have made significant
progress, and plan to enhance our disclosure further.
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22 Marston’s PLC Annual Report and Accounts 2024
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TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
SUSTAINABILITY GOVERNANCE
STRUCTURE
Board of Directors
Ultimate oversight of our sustainability
strategy and the risks and opportunities
presented by climate change
General Counsel &
CompanySecretary
Reviews development and implementation
ofpolicies and strategies, including those
onclimate change
Chair of the sustainability taskforce, ensuring
Executive Committee-level stewardship
Sustainability taskforce
Senior leaders responsible for shaping
thesustainability strategy and setting,
communicating and monitoring our targets
and commitments
Steering Committees
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 group, the D&I Taskforce and
supporting employee-led networks
GOVERNANCE
Board oversight
The Board is ultimately responsible for the
strategic direction of the Company, including
climate-related risks and opportunities.
OurBoard and Executive Committee
retainoversight of our sustainability
strategyensuring proper stewardship
andaccountability and are ultimately
responsible for attainment of our targets
and climate related risks and opportunities.
The Board is updated during the year
onESG topics, including an update on
ourprogress to Net Zero, by our
Sustainability taskforce and Plant steering
committee.
Our Sustainability taskforce and the steering
committees it leads, for each of the four
pillars (Planet, People, Product and Policy),
are the engine room of execution for
initiatives. These cross-functional teams
have the expertise, networks and authority
to drive the activities that support and
helpensure that the sustainability strategy
isfully integrated into ourbusiness, from the
impact of climate change to our inclusion
strategy.
Planet Steering Committee
Our Planet Steering Committee assists with
the development and delivery of carbon
reduction projects. It ischaired byour
Energy Manager and includes team
members from areas of the business that
aremost involved with our NetZero delivery
and wider environmental matters. The
group meets quarterly and reports progress
on our Net Zero plans to the Sustainability
taskforce and Executive Committee.
The Committee reviews and identifies the
optimal timings for the investment in new
technologies and our progression away
from the supply of gas and electricity from
non-renewable sources. The results of these
reviews are reported tothe Executive
Committee to allow climate-related issues
to be considered when approving annual
budgets, major investments, divestments
and strategic plans and programmes.
Risk management
Business risks including climate-related risks
faced now, and in the future, are assessed
alongside our key value drivers, whilst using
standardised criteria to provide consistency
in the evaluation of both their potential
impact and likelihood. More information
onour principal risks, including ESG-related
risks and details on how we seek to mitigate
them, can be found on pages 37 to 41.
Under delegation from the Executive
Committee, the Director of Corporate Risk
has responsibility to oversee risk
management. Information on how we
manage risk, which included ESG-related
risks, can be found on page 35.
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STRATEGY
Our commitment to operating safely and
sustainably is a key enabler of our business
strategy. Marston’s strategy incorporates
theconsideration of climate-related risks
and opportunities and the drive to achieve
Net Zero by 2040, through identifying assessing
and managing our environmental impacts.
Procurement
As part of our procurement strategy, we
consider the environmental record of all
major new suppliers. For food suppliers this
includes the number of miles that food
travels from ‘farm to fork’, although no
acceptable level has as yet been defined.
Environmental information is collected from
our suppliers through our Food Information
System, Smart Supplier, together with other
ethical data such as employment conditions
and safety. For other suppliers we use
information from Sedex, an online platform
where businesses share information about
their ethical performance. We have
contingency plans are in place to manage
supply chain disruptions, such as product
substitutions, should they arise from climate-
related factors.
Food wastage
As outlined on page 18, we have committed
to reducing our food waste by50% by 2030,
compared to our baseline year (2019).
Wehave already achieved a32% reduction
by reducing menuoptions and through
food waste initiatives.
Food waste is weighed when it is collected
by our waste supplier and all food waste is
reused to generate energy. More information
can befound in our 2024 Impact Report
available at www.marstonspubs.co.uk.
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 incentivised to
increase the proportion recycled. More
details can be found in our 2024 Impact
Report.
Energy usage
For several years we have conducted an
energy and carbon employee engagement
campaign called ‘Going Green’. Features
include weekly energy reporting incentives,
training and guidance is provided to help
further reduce energy and carbon emissions.
We continue to look to reduce carbon
emissions and energy consumption at our
pubs, including building management
systems, induction catering equipment
andLED lighting.
Sustainability and investment
Our strategy for growing the business
includes reducing our reliance on fossil fuels,
and investing in assets that take advantage
of renewable energy. This includes the
modernisation and electrification of
catering equipment and the installation
oflower-carbon heating systems.
Climate-related risks
andopportunities
The table on pages 25 to 29 shows the
relevant physical and transitional climate-
related risks and opportunities identified
bythe Company. It is not possible to reliably
quantify the financial impact 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 clearer, and our
TCFD reporting develops.
Risk assessment
The risks are assessed in terms of their
potential impact on our business in
eitherthe short, medium, or long-term.
Wedefine material climate-related risks and
opportunities as those that are sufficiently
important to our investors and other
stakeholders to warrant public reporting.
We will continually reassess our evaluation
of climate-related risks and opportunities
disclosed in our TCFD report as the views
ofour stakeholders evolve.
We will, wherever possible, seek to remove
those risks that pose a threat to achieving
our strategic objectives. If avoidance is
impossible, we will work to mitigate the risk.
We consider that this approach 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 the Group’s climate-related risks
have the potential to impact our business
across all three timeframes: short (1–5 years),
medium (5–10 years) and long-term
(10+years). Many of these risks cannot
besiloed into specific 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
are reasonably likely to affect us inthe
future, though it is more difficult toquantify
their potential impact. The timeframe for
long-term risks (10+ years) considers those
risks that might be contingent upon factors
inthe earlier time frames orwhere there
isagreater degree of uncertainty about
when or if their impact will be felt.
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.
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RISK AND RISK MANAGEMENT
Risk assessment process
The risks of climate change are considered by management throughout the year, including consideration of their potential impact on our financial modelling and Net Zero delivery.
OurPlanet Steering Committee group meets to consider progress made to tackle climate change, to plan for the next steps and consider the relevant risks and opportunities. The risks
areprioritised in terms of their net position after mitigation regarding likelihood and impact.
Risk Classification Impact on Marston’s Mitigation 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.
In recent years we have piloted early flood warning
systems to monitor and provide alerts to changes to
surface water and ordinary watercourses. Surface
water flooding might otherwise go unnoticed, and
an early alert provides additional time to react to
protect theproperty.
Physical risk • Properties in the estate susceptible
tomedium level of flood risk
(seeFlooding risk deep dive
onpage31)
• 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
We have higher levels of flood defence in our high-risk
pubs.
All our properties are insured for damage caused by
flooding and storms above a £1 million deductible, with
an aggregated claims limit of £2.5 million, above which
the insurer would compensate all aggregated loss.
Marston’s owns and operates a captive insurance
company registered in Guernsey. The captive covers
£750,000 of each loss up to the aggregated claims limit.
Cellar pumps are 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 to reduce medium
tolong-term risk.
The timeframe used equates to:
Short
Medium Long Short, medium and long term
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Risk Classification Impact on Marston’s Mitigation 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
mains water supply to operate.
Physical risk • 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
Minimising the impacts of climate change through
carbon reduction and offsetting.
We reduced water consumption through employee
training, leak detection and implementation oflower
water consumption processes and installation of
equipment.
Operation of our water self-supply licence, ‘Marston’s
Water’, provides a 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.
EXTREME AND 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.
Physical risk • 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 outdoor space. The
converse istrue for periods of
wetweather
Supply chain disruptions are mitigated through seeking
newsuppliers and/or ensuring contingency plans are
inplace.
Marston’s has a diverse pub estate, which positions
thebusiness well for periods of both wet and warmer
weather.
The timeframe used equates to:
Short
Medium Long Short, medium and long term
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Risk Classification Impact on Marston’s Mitigation 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.
Transitional risk 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 or sustainability 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.
LEGISLATION AND POLICY
No linked metric at present
Increased risk of non-compliance from accelerated,
or new, legislation to support the global climate
change agenda.
Transitional risk • Increased costs to adapt and
comply with new regulations,
e.g.requirements to bring properties
in line with EPC Band B criteria
• Higher compliance costs or
increased insurance premiums
oncarbon use
• Increasing costs and/or decreasing
revenue due to taxation on the sale
of beef and dairy and Increased
carbon taxation on GHG emissions
We are 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.
Our plan for Net Zero 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
Medium Long Short, medium and long term
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Risk Classification Impact on Marston’s Mitigation Timeframe
CONSUMER HABITS
Linked metric: food waste reduction
A change in consumer habits through guest
sentiment and the prioritisation of sustainable
choices.
Linked opportunities:
• New technology
• Marston’s has the largest rapid EV charging
network in the industry
• 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
• Increased sourcing of local food, capturing
guests’ interest in the distance ‘from farm to fork’
and supporting local producers with a lower
carbon footprint
• Increased energy efficiency andreduced usage
Transitional risk 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,
wines that have not been transported
across the globe andvegan/
vegetarian options.
Guest sentiment regarding 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.
Our sustainability strategy and progress made to date,
such as reduction in waste and a rapid EV charging
network, put us in a strong position. More details of
allour initiatives can be found in our Impact Report:
www.marstonspubs.co.uk.
The timeframe used equates to:
Short
Medium Long Short, medium and long term
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Risk Classification Impact on Marston’s Mitigation Timeframe
TECHNOLOGY
Linked metrics: CO
2
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. The automation of when lights in ourpubs
come on and off to reduce energy usage.
Transitional risk • Global and national action to
reduce emissions will likely increase
costs of raw materials, production
and distribution, increasing costs
throughout supply chains
• The cost of energy will be impacted
by the changes required to move
away from fossil fuels and towards
sustainable energy sources
• As we proceed 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, which could include 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. For future catering and
heating systems, we will look to include electrical
andlow-carbon technology. This will include upgrades
to electricity supplies to facilitate the transition to fully
electric and low carbon.
All purchased cabinet refrigerators are high-efficiency
hydrocarbon units and LED lighting is installed in all
internal areas.
Adopting new technologies comes with additional
costsin the short term; however, it may lead to overall
cost savings inthe longer term as well as bringing
environmental andsustainability benefits, making
usmore appealing to guests, investors and financial
institutions.
The timeframe used equates to:
Short
Medium Long Short, medium and long term
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RISK SCENARIO ANALYSIS
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, and to link the scenarios to
impacts from the specific risks for our
business, such as flooding.
The first two scenarios assume that early
interventions by government will cost the
businesses more to transition in the short
tomedium term, while the third scenario
assumes a less orderly transition from
carbon-based fuels resulting in far greater
environmental damage, more onerous
legislative measures, and a delay resulting
in global temperatures rising above 3%.
The considerations are as follows:
Scenario 1 – Global temperature increase
kept below 2°C
• Potentially higher transition costs in the
shortterm (1–5 years)
• Tighter government restrictions for
amoreorderly climate transition
Transitional 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.
Scenario 2 – Global temperature increase
kept between 2°C to 3°C
• Potentially higher transition cost in the
medium term (5–10 years)
• Increased water scarcity
• Government action delayed but more
aggressive in the longer term
• More technological opportunities
• Global economic impacts.
Transition risks, the same as the 2°C scenario,
albeit delayed to within 5–10 years:
• A risk that more flooding creates
additional repairs costs and, in certain
locations, property insurance becomes
more expensive
• Increase in 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
Scenario 3 – Global temperature kept
above 3°C
• Lower transition costs in the short term
• Government action delayed
• Additional or increased flooding, and
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 being impacted by
other factors associated with climate
change forinstance, wildfire is not thought
to be high enough to warrant modelling.
Environmental predictions about climate
change within the UK and global warming
are speculative, reliant upon a range
ofscientific models not specifically
developed for forecasting potential
impactson individual properties.
Attempting 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 potential increase in damage
toour own pubs is uncertain.
Currently on average over the last 10 years
significant flood damage (greater than
£10,000 per site) only occurs on average
one-two times a year. At present, flooding
inour estate does not follow any discernible
trend which could support any empirical
calculation of what the level of damage
might be in the future.
We assess climate-related water scarcity risk
down to a site level. This allows us to identify
and classify the risk of properties affected
by water scarcity dependent on defined
climate scenarios.
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Flooding risk deep dive
Over the past 10 years there has been no discernible trend of increased flooding at our
properties.
Financial year Number of floods
Largest loss (pub damage)
£(’000)
Total loss (pub damage)
£(’000)
2024 – – –
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 – – –
Total 17 1,953
Note: ‘Floods’ includes all flood damage notified to insurers. It excludes minor flood related
damage not notified to our insurers.
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.
In the last 20 years, a small number of our pubs have been impacted by flooding incidents.
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
Environmental Agency data available
onwww.gov.uk. Surface water flooding,
sometimes known as flash flooding,
happens when heavy rainfall cannot
drainaway. Itisdifficult to predict the risk
accurately as it depends on rainfall volume
and location (for example such flooding
hasbeen known to occur up hills and away
from rivers andother bodies of water) and
ismore widespread urban 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: each year this area has
achance of flooding of less than 0.1%.
• Low risk: each year this area has a
chance of flooding of between 0.1%
and1%.
• Medium risk: each year this area has
achance of flooding of between 1%
and3.3%.
• High risk: each year this areahas a
chance of flooding of greater than 3.3%.
• Acute risk: site is at risk of annual flooding
which is likely to cause disruption to
trading or significant damage to the
property.
Flood risk – number of sites per
riskrating
Surface
water risk
River and
sea risk
Acute risk
1
2 0
High risk
2
231 29
Medium risk
2
206 57
Low risk
2
343 81
Very low risk
2
557 1,172
1,339 1,339
1. As assessed internally.
2. According to the Environmental 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 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
and any other environmental-related
factors that may arise.
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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.
It is, however, feasible to convert our pubs
over to all-electric from gas and oil during
the normal cycle of equipment replacement,
thereby reducing the additional cost of the
transition to Net Zero.
As a UK pub operator, we do not consider
that our direct operations are subject to
high climate-related risk in theshort to
medium term. Whilst we do have risks and
opportunities, as outlined in this report,
therisks are not material enough to impact
our viability. 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 continue 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 globe will need
toadapt to the changing climate; the
moresuccessful businesses will at the same
time seize the opportunities that come with
that adaptation.
For commercial reasons we cannot
providefigures at this time, however, each
of 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
• Solar panels at our Pub Support Centre
and 19 of our pubs
• Cooking oil collections from the pubs
• Clothes banks
Environmental data
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.
For FY2023 where possible, we have
calculated the Scope 3 emissions for energy
consumed by our supply chain. To achieve
this we have worked with Zero Carbon
Services to identify the emissions associated
with purchased goods and the services
included, factoring in specific categoristics
of our own suppliers, for instance where
goods are sourced globally.
We have been able to calculate our total
emissions, and the Scope 3 emissions for
food and drink supplies.
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’.
Strategic report Governance Financial statements Additional information
32 Marston’s PLC Annual Report and Accounts 2024
SUSTAINABILITY continued
TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
8.09
8.6
2024
2023
Greenhouse gas emissions intensity ratio
CO
2
e tonnes per £100,000 turnover
348,348
359,431
2024
2023
Energy usage (mwhr)
(Scope 1 and 2 &, 3 relating to business mileage)
341,297
2023
Total Scope 3 emissions (CO
2
e tonnes)
(data only collected for FY2023)
72,747
75,014
2024
2023
Greenhouse gas emissions by source
(Scope 1 & 2, Scope 3 relating to business mileage) CO
2
e tonnes
Notes:
1. We report on all the measured emissions
sources required under the Companies Act
2006 (Strategic Report and Directors’ Reports)
Regulations 2013.
2. Scope 1 & 2 data and scope 3 business
mileage data has been collected is in respect
of the year ended 30 June 2024, in accordance
with the Streamlined Energy and Carbon
Reporting regulation.
3. Gas consumption decreased by 4% compared
to last year. Electricity consumption was
unchanged. 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 optimisations.
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 because of the
initiatives we have taken to increase energy
efficiency. Overrecent years CAPEX works
have presented 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 and cellar
freshair cooling and management systems.
METRICS AND TARGET
Owning our own water licence allows us to more accurately track usage, identify
leaks and build in greater efficiency.
Water saved per day
by identifying and repairing water consumption issues
2024 2023
Pints per day saved 366,961 302,575
Food production is carbon intensive and food waste compounds the issue.
Throughout our operations, we have established processes to minimise food waste
emanating from our pub kitchens, while ongoing initiatives continue to support
ourfood waste reduction efforts. For example, our food development team has
removed items from the menu that had high wastage. We successfully collaborate
with ‘Too Good to Go’ to save excess food from going to waste. Food waste is taken
from our pubs to anaerobic digesters, where it is used to produce biogas and fertiliser.
Food waste
2019
(Base year) 2024 2023
Food waste (tonnes) 4,247 2,872 3,266
Of which: 2024 2023
Electricity & gas 64,999 66,576
Petrol & diesel 883 1,20 0
Refrigerants – pubs 4,872 4,972
LPG 1,786 2,067
Oil 207 200
Total 72,747 75,014
Strategic report Governance Financial statements Additional information
33Marston’s PLC Annual Report and Accounts 2024
SUSTAINABILITY continued
TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
61.5
13.0
Processing of sold products
8.6
4.1
3.8
3.7
2.7
1.1
0.7
0.3
0.2
0.2
0.1
Business travel
Waste
Investments
Upstreams T&D
F-Gas
Downstream LA
Fera
Capital goods
Commuting
Fuels
Electricity (Market based)
PG&S
Market based emissions by GHG category (%)
(Scope 1 & 2 and Scope 3 TCO
2
e) (FY2023)
Scope 3
Scope 2 Scope 1
Scope 3 emissions by GHG category
(%) (FY2023)
PG&S 79.7
Process of sold products 0.1
Downstream LA 3.5
Investments 0.3
Capital goods 4.9
FERA 4.8
Upstream T&D 0.9
Waste 0.3
Business travel 0.2
Commuting 5.3
TARGETS
Our Net Zero strategy has been developed
in alignment with the Zero Carbon Forum to
push the sector to reach Net Zero by 2040.
Progress against our roadmap to Net Zero
was reported for the first time within our
2022 Annual Report and Accounts.
This year, working with Zero Carbon Services,
we are further refining our transition plan
toward Net Zero with the objective of
submitting it to the Science Based Target
initiative or similar standard for approval.
This supports our aim of continuing to work
collaboratively with the UK hospitality
industry as a whole to decarbonise and
build a sustainable business model.
As we proceed with the transition to Net
Zero it’s likely we will adopt additional
targets to track progress. We intend to
report on these targets as they become
operational in future years.
Our targets for reducing emissions are the
same as our plan to achieve Net Zero:
• Reduce food waste by 50% by 2030
(measured against 2019 as a baseline)
• Reach Net Zero by 2040. 2023 is an
appropriate baseline given changes to
the business in recent earlier years
• Cooking oil reclaim rate 60%
• To reduce the volume of water we
consume across our estate every year
Strategic report Governance Financial statements Additional information
34 Marston’s PLC Annual Report and Accounts 2024
SUSTAINABILITY continued
TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
Effective risk management helps the
business to identify any emerging or
inherent risks and opportunities that could
obstruct, or support, the business model or
the implementation of its strategy. Risk is at
the heart of everything we do, or elect not
to do, as a Group; identifying and assessing
risks and opportunities is an integral part of
the day-to-day operations, planning and
processes exercised by management.
To support management and the Board in
the identification of risk and the assessment
of the effectiveness of controls, the Risk &
Compliance Committee meets at least
quarterly to review both the principal and
emerging risks facing the business and we
use a risk management framework which
tracks all categories of risk and controls and
their effectiveness. All risks and controls are
assigned an owner and every function
within the Company has an important role
to play in managing those risks and
assessing the effectiveness of controls on an
ongoing basis, and as an inseparable part
of the skill and judgement that
management exercises every day.
Risk management is supported and
administered by the risk management
team, and the Board and its Committees
are accountable for overseeing its overall
effectiveness. Here is an overview of the
Company’s core risk management
framework and how thissupports the
Company to monitor risk.
Governance
Board and Audit Committee: Ultimately responsible for the governance framework, internal controls and risk management.
Responsibleforensuringthatmanagement reviews and reports on the effectiveness of the internal controls. Responsible for
understandingthenatureandextent of the principal risks, formulating its risk appetite and the Viability statement.
Supporting Committees
Investment: Executive-level
accountability for investment
decisions, robust planning,
post-investment analysis, assessing
project risks, undertaking sensitivity
analysis.
Risk & Compliance: Considers
principal risks, effectiveness of
controls and policies in operation,
tracks emerging legislation.
Data Security: Reviews
management of data and
associated compliance matters.
Business Continuity: Considers
threats to business operations,
contingency plans, resilience
ofsupply chains and IT services.
Company policies and processes
Levels of assurance
Health & Safety
• Policies and procedures to
mitigate the risks in our pubs.
• Safety and allergens audits
conducted by external
co-source.
• Accident investigations by
ourRegional Safety Advisers.
• EHO hygiene scores tracked,
improvements identified and
monitored.
• Accidents reported centrally
through to the Safety team
forconsideration.
• Accident trends monitored.
Internal Audit
• Independent from other
business operations.
• Internal audit strategy is
risk-based.
• Audit project results are
reported to the business,Risk
&Compliance Committee
andAudit Committee.
• Expertiseprovided by an
external audit co-source.
• Our Profit Protection and Stock
teams test financial controls at
pubs using data analysis to
identify sites of concern.
• Follow-up audits are arranged
if necessary to confirm
improvements.
Enterprise Risk Management
(ERM)
• Identify, monitor and report
key risks to the business.
• Keyrisks and controls recorded
in our Corporate Risk Register.
• The ownership and assessment
of risk and its control is
discussed and recorded.
• Corporate Risk Register is
shared with managers to keep
it current and relevant.
• 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.
Executive Committee: The mitigation of risk is delegated to the Executive Committee. It monitors the control of risk and makes decisions
havingreviewedsufficient information about the risks and opportunities involved. It alsooversees risks to the strategy, and the actions
takenbymanagement tocontrol and mitigate those risks.
Emerging risk: emerging risks identified by managers; policies and processes adapted; highlighted
to supporting committees and incorporated within ERM.
Individual risk managers: Responsible for identifying and monitoring risks and designing the control environment
necessary to mitigate them to a level within the range of tolerance for the business.
Strategic report Governance Financial statements Additional information
35Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT
How Marston’s manages risk
4
5
1
3
2
7
6
8
Impact
Likelihood
1
Uncertain economic
andpolitical outlook
2
Strategy delivery and
businesstransformation
3
Information technology
anddata security
4
Environment, Social
andGovernance
5
Talent attraction, retention
andrelated employment cost
6
Health & Safety and food safety
7
Liquidity and compliance
withfinancial covenants
8
Business continuity
Key:
Increasing
Reducing
Stable
Principal risks
The risks are plotted on the matrix according to impact and likelihood. The placing
of the risk reflects the position after mitigation through controls.
The Board is satisfied that appropriate
processes are in place to support the
identification and management of risk. The
Board (and its Committees, as appropriate)
has carried out a robust assessment of the
Company’s principal and emerging risks
and our principal risks, and an explanation
of how these are being managed or
mitigated, are set out on pages 37 to 41. A
focus for theyear ahead is to further embed
risk mitigation and controls, particularly in
relation to strategic planning.
The Board has overall responsibility for the
Company’s internal control systems and risk
management framework and for reviewing
its effectiveness. In order to discharge that
responsibility, the Audit Committee
completed (and reported to the Board its
conclusions in respect of) its annual review
and established that such systems are
effective in line with the Financial Reporting
Council’s ‘Guidance on Risk Management,
Internal Control and Related Financial and
Business Reporting’.
Continuous improvement
We continuously review our risks and how
well they are managed. In light of the
strategic review in the reporting year, the
principal risk profile was reviewed to ensure
it captures all risks which could impact
thedelivery of the strategic objectives.
In FY2025, further improvements are
planned to ensure that risk considerations
are further embedded in the strategic
planning processes of the Executive
Committee and the Board (including
formation of the Investment Committee,
details of which can be found on page 51),
and that the control environment is, and
remains, effective.
Risk mapping
Whilst monitoring risk and control
effectiveness as an integral part of day-to-
day operations, the risk management team
meets formally each year with all risk and
control owners, including all members of
the Executive Committee, to capture any
new or evolved risks and to consider how
effective the controls and levels of
assurance are. These are captured on risk
management software and a heat map is
produced for oversight by the Board and
Audit Committee as shown here. The heat
map indicates the principal risks and the
likelihood and impact of a ‘risk event’. The
principal risks and any movements during
the reporting year are explained on pages
37 to 41.
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36 Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT continued
1. UNCERTAIN ECONOMIC AND POLITICAL OUTLOOK
Risk description and potential impact Key mitigations
Risk category:
%
Movement:
There is a risk that an uncertain economic or political outlook could adversely
impact market demand and consumer confidence. Ongoing geopolitical
conflicts in Ukraine and the Middle East and the recent US election may also
result in structural inflation which in turn may impact our cost base, including
utilities, construction materials and food.
Wider legislative and policy changes can also impact our business, including
increased taxes leading to a decrease in consumer spending and uncertainty
in terms of both the cost of living and the wider economic outlook.
• A stable balance sheet with reduced leverage and improved headroom
oncovenants, which is better able to withstand market shocks.
• A consumer-led strategy, designed to increase market share and financial
returns through the execution of clearly defined value drivers.
• Good progress with our cost control and efficiency measures to offset
inflationary pressures.
• An estate and portfolio that is naturally balanced to appeal across a range
of consumer segments, which is underpinned by rigorous revenue
management disciplines and expertise.
• Detailed planning and post-investment processes include risk and sensitivity
analysis.
The following summarises the principal risks and uncertainties that may affect the
Company and which could impact performance and the execution of our strategic
priorities. Risks change over time and therefore the risks reported do not represent
acomplete list of all the risks that the Company monitors, and may potentially face,
butinstead focuses on those that are considered to be most relevant.
Classification of principal risks
Our principal risks can be divided into four broad categories:
Strategic risk – risks that impact the strategic positioning of the business, including
market attractiveness and competitive positioning.
%
Commercial risk – risks that relate to the commercial decisions taken by management,
such as pricing strategies, that can impact key outputs, including revenue and margin
growth.
Operational risk – operational risks refer to the way the Company operates on a
day-to-day basis to deliver the products and services to our guests.
Financial risk – financial risks relate to funding, liquidity and interest rate management.
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37Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT continued
Our principal risks and uncertainties
2. STRATEGY DELIVERY AND BUSINESS TRANSFORMATION
Risk description and potential impact Key mitigations
Risk category:
Movement:
As set out on page 8, the Company strategy was developed following
aforensic review of consumer trends and sector dynamics. Nevertheless, as
withany business change, there is a risk of being unable to deliver major
transformational projects on time, or realising the full benefit due to the volume
or pace of change. This particularly refers to the deployment of capital
projects to deliver differentiated formats and upgrading technology to deliver
digital transformation. Organisational capability and dependencies may also
pose a risk which is linked to the speed of change and potential operational
impact of business transformation. The Board recognises that the development
of our leaders is critical to ensuring the right culture and behaviours are
embedded and to ensure we have and maintain the right skills and capability
to meet our strategic plan.
Strategy-related risks are elevated for the next 12 months due to the number
ofdependencies and number of changes in a relatively short timeframe.
• To help ensure successful delivery, we have made important changes to the
Board and Executive team to further align the leadership with the evolving
needs of the business, including a new Chief Operating Officer and Chief
Development Officer at Executive level. Further information can be found
on page 3.
• We have added internal transformation expertise with a cross functional
working group of senior people responsible for monitoring implementation
and interdependency risk.
• Improved governance by the addition of an Investment Committee
providing Executive-level accountability for investment decisions and
responsibility for robust planning and post-investment analysis including
assessing project risks and undertaking sensitivity analysis.
• Talent, culture and capability are one of the key items on the Board’s
agenda in 2025 supported by Board-level workforce engagement.
• Monthly scorecard reporting to the Board on key strategic projects and
employee scores.
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38 Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT continued
3. INFORMATION TECHNOLOGY AND DATA SECURITY
Risk description and potential impact Key mitigations
Risk category:
Movement:
The effective operation of many aspects of our business depends upon the
Company’s IT network. All businesses are subject to continuously evolving
methods of cyber threat, including targeting vulnerable businesses with
datatheft, denial of service attacks, fraud and malware. The risks posed by
cyber-attacks are wide ranging and can include loss of revenue, reputation
and consumer trust, regulatory fines and an adverse impact on the
Company’s share price.
• We have internal and external specialists who operate a wide range
ofproactive and reactive security controls including antivirus software,
network/system monitoring, and regular penetration testing to identify
vulnerabilities.
• A mature security improvement programme is in place, with regular
internaland external reviews including scenario testing, audits and
compliance testing.
• Established backup procedures and data recovery plans which are
regularly tested and rehearsed.
• Engaging training platforms in place covering cyber awareness, data
protection and training on Marston’s own policies and procedures,
including data retention.
4. ENVIRONMENT, SOCIAL AND GOVERNANCE
Risk description and potential impact Key mitigations
Risk category:
Movement:
As a business we can be impacted by environmental issues such as climate
change, water shortages, inability to meet carbon targets and social issues,
such as lack of diversity, and social trends such as changing lifestyle choices.
Our plans to achieve Net Zero are also fundamentally dependent upon the
Government’s ability to provide renewable energy at an affordable price.
Transition remains a challenge for our business, and those within our supply
chain, if the cost to transition remains high and availability for renewable
energy and green technology is not improved. Uncertainty as to how these
collective risks will evolve and any impact on delivering on our commitments
and embedding them within our business model, could impact our reputation
and our financial performance.
There is a risk that within our supply chain a third-party product is supplied
which is unethical which in turn could impact our reputation and sustainability
credentials.
• Our TCFD working group helps us to identify key risks, opportunities and
theimpacts of climate change on the business.
• Our ESG strategy sets targets and encourages the achievement of our goals
relating to our four key pillars: People, Planet, Products and Policy. For more
information see page 19.
• Regular ethical supplier audits combined with our responsible sourcing
policies, including the use of Sedex, help to improve supply chain
transparency.
Strategic report Governance Financial statements Additional information
39Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT continued
5. TALENT ATTRACTION, RETENTION AND RELATED EMPLOYMENT COSTS
Risk description and potential impact Key mitigations
Risk category:
Movement:
Whilst some of the structural challenges facing the labour market in hospitality
have largely stabilised, organisational changes can lead to uncertainty and,
as mentioned in Risk 2, specific skills and experience are required to deliver
ourstrategic priorities.
The National Minimum Wage and National Insurance increases recently
announced by the Government will result in higher operating costs for both
theCompany and our Pub Partners, which in turn has an impact on our profit
and margin.
New legislation such as the Employment Rights Bill 2024 includes additional
provisions which are likely to further increase our operating costs, and
significant regulatory change presents risks associated with adverse publicity
and loss of revenue in the event of compliance failures.
• Implementation of workforce management tools to ensure optimum
productivity and efficiency.
• Monitoring emerging legislation and assessing the Company’s readiness for
adoption and implementation through the Risk & Compliance Committee
and the Audit Committee.
• Adopting contracts of employment which protect the rights of the individual
but also provide the Company with sufficient agility in an evolving
regulatory landscape.
• Active monitoring of employee and Pub Partner engagement scores, addressing
issues raised promptly and communicating back with sufficient clarity.
• Anticipating the impact of changes in legislation on our budgeting and
forecasting.
6. HEALTH AND SAFETY, FOOD SAFETY
Risk description and potential impact Key mitigations
Risk category:
Movement:
The safety of our guests and employees is our number one priority, and a major
health and safety or food safety breach could lead to serious injury or loss of
life. This could be due to a failure in safety standards, supply chain issues or
poor hygiene standards, and could lead to adverse publicity, loss of revenue,
reputational damage and criminal sanctions and fines.
• Our independent auditors, NSF, undertake unannounced audits which
cover allergens, fire, food safety and general health and safety standards,
and the scores form part of monthly Executive and Board level reporting,
aswell as forming part of our operational incentive and bonus schemes.
• Comprehensive health and safety employee training programmes are
inplace; completion is mandatory and is monitored.
• We have robust processes in place for fire safety which are regularly tested
and checked by our internal audit team.
• Our Food Charter contains food safety and sourcing requirements which
include traceability and testing requirements, submitting to audits and
registering with Sedex.
• Investment in food information systems gives us the ability to collect
ingredient information from our suppliers. This enables us to provide
information on mandatory and non-mandatory allergens to our guests.
Strategic report Governance Financial statements Additional information
40 Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT continued
7. LIQUIDITY AND COMPLIANCE WITH FINANCIAL COVENANTS
Risk description and potential impact Key mitigations
Risk category:
Movement:
Whilst inflationary pressures have eased, interest rates remain high. Following
the disposal of CMBC in July 2024, the Group’s net debt was reduced
significantly, resulting in a relaxation of some of the financial covenants and,
consequently, the risk of breach has also reduced. Further detail is set out on
page 12.
Nevertheless, there remains a risk that financial covenants are breached due
to circumstances beyond our control, for example, a change in the economic
climate leading to reduced consumer confidence and Group liquidity. As
documented in the Going Concern assessment on page 59 the Board has
assessed a severe but plausible downside scenario with headroom against all
covenants and there is sufficient liquidity, therefore the overall risk is decreasing.
• Stable balance sheet with reducing leverage.
• Cash generative operating model.
• Regular forecasting and testing of covenant compliance is performed and
reported.
• Headroom is considered as part of the decision-making process before
approving any large investment or strategic development.
• Predominantly freehold estate.
• Strong relationships and stakeholder management with our banking group
and bondholders.
8. BUSINESS CONTINUITY
Risk description and potential impact Key mitigations
Risk category:
Movement:
Business continuity can be threatened by unforeseen events impacting upon
our ability to trade or compete effectively and reducing our operational
effectiveness. The risk could result from disruption to our IT systems or supply
chain.
There is a possibility that another form of pandemic could 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. Whilst the risk of pandemic in the short term is deemed low,
werecognise that this risk has the singular capability to shut all pubs with
littlewarning.
• We periodically audit key suppliers and our crisis planning to assess our
readiness, and the readiness of our supply chain, for adapting to business
continuity issues.
• Business Continuity Committee meets regularly, with key matters or
concerns escalated to the Risk & Compliance Committee.
• We have contingency plans in place for future lockdowns or other events
that could restrict trade in a material way.
• Our Pub Support Centre employees have the resources and ability to work
remotely.
• Our IT control environment and testing programme.
Strategic report Governance Financial statements Additional information
41Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT continued
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
groups principal risks and uncertainties set
out on pages 37 to 41, specifically Uncertain
economic and political outlook (risk 1),
Strategy delivery and business transformation
(risk 2), Talent attraction, retention and
related employment costs (risk 5) and
Liquidity and compliance with financial
covenants (risk 7).
Principal risks 1 (Uncertain economic and
political outlook) and 2 (Strategy delivery
and business transformation) relate to the
continued uncertainty surrounding the
economic and political environment
including inflationary pressures, political
uncertainty and ongoing geopolitical
conflicts, which could lead to increased
costs and reduced consumer confidence,
together with the risk of being unable to
deliver major transformational projects on
time, or realising the full benefit due to the
volume or pace of change. Further, risk 5
(Talent attraction, retention and related
employment costs) relates to the ability to
recruit and retain skilled and experienced
labour and increases to national minimum
wage rates and national insurance, both
adding to operational cost pressures and
ability to deliver strategy.
To assess the impact of the Group’s principal
risks and uncertainties on its long-term
viability, a downside scenario reflecting
increased costs and a severe but plausible
downside scenario in the form of a reverse
stress test to the base case was applied to
the Group’s financial forecasts inthe form of
increased costs together with reduced sales
(taking into account the above risks), with
variable costs moving in line with the
change in sales volumes. Keyconsiderations
are the Group’s liquidity and ability to meet
financial covenants inthe downside
scenarios modelled (risk 7, Liquidity and
compliance with financial covenants). 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.
In both the downside and reverse stress test
modelled, the Group continues to remain
profitable with adequate liquidity, and
financial covenant tests are met.
In the forecasted period the Group is
required to refinance its bank facility by
July2026, 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 bank facilities 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 forecasts
considered market insight and trends based
on changing consumer behaviour and
therefore considered the allocation of
capital to adapt to these trends.
Further, whilst the experience of inflationary
pressures and economic uncertainty could
be expected to lead to lasting changes in
both customer behaviour and competition
in the hospitality sector, in making this
assessment the Group has taken the view
that any adverse impact on sales, through
reduced visits 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.
The Directors have determined that, over
the period of the viability assessment, there
is not expected to be a significant impact
resulting from climate change.
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 are the result of internal risk
management and control processes, with
further details set out on pages 35 to 36.
Strategic report approval
The Strategic report, outlined from
theinside front cover to page 42,
incorporates: A new chapter,
Investment case, Chair’s statement,
CEO’s statement, Our business model,
Our strategy, Our key performance
indicators, Group operational and
financial review, Stakeholder
engagement and Section 172(1)
statement, Non-financial and
sustainability information statement,
Sustainability, and Risk and risk
management.
By order of the Board:
JUSTIN PLATT
CHIEF EXECUTIVE OFFICER
Strategic report Governance Financial statements Additional information
42 Marston’s PLC Annual Report and Accounts 2024
RISK & RISK MANAGEMENT continued
VIABILITY STATEMENT
The UK Corporate Governance Code: How we comply
The Governance Report, which includes theprincipal Committee Reports and Directors’
Report, explains how the Board has applied the principles and complied with the provisions
of the UK Corporate Governance Code 2018 (the ‘2018 Code’). The Code is available
toview on the website of the Financial Reporting Council at www.frc.org.uk.
The 2018 Code has applied throughout the reporting period and the Board confirms that
ithas applied the principles and complied with the provisions of the 2018 Code.
Board and Committee attendance (scheduled meetings)
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Bridget Lea
1
6/8 5/5 1/2 3/3
Hayleigh Lupino 8/8
Ken Lever
2
2/2 1/1
Octavia Morley 8/8 5/5 2/2 3/3
Rachel Osborne
3
6/6 2/2 1/1
Justin Platt
4
6/6
Nick Varney 8/8 2/2 3/3
Former Directors
Andrew Andrea
5
1/1
Matthew Roberts
6
2/2 3/3 2/2
William Rucker
7
6/6 1/1
1. Bridget Lea was unable to attend two scheduled Board meetings, one Nomination Committee and one
Remuneration Committee meeting due to unavoidable prior commitments.
2. Ken Lever was appointed to the Board with effect from 8 July 2024.
3. Rachel Osborne was appointed to the Board with effect from 23 January 2024.
4. Justin Platt was appointed to the Board with effect from 10 January 2024.
5. Andrew Andrea stepped down from the Board on 17 November 2023.
6. Matthew Roberts stepped down from the Board on 23 January 2024.
7. William Rucker stepped down from the Board on 8 July 2024.
0-3 years
3-6 years
6+
Independent
4
Independent
on appointment
1
Executive
2
Independence
As at 28 September 2024
Female
Male
Senior Board positions
As at 28 September 2024
Chair
Senior
Independent
Director
Chief
Executive Of ficer
Chief
Financial Officer
Board skills and expertise
Consumer/Retail
Hospitality
Commercial Property
People
Finance
£ £ £ £
Marketing
Digital
Financial statements Additional information
43Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
GOVERNANCE AT A GLANCE
“Our governance structure
processes will increasingly be
focused on value creation for
our stakeholders.”
KEN LEVER
CHAIR
On behalf of the Board, I am pleased to
introduce my first Corporate Governance
report for the year ended 28 September 2024
(the ‘reporting year’).
In July we announced the disposal of the
Group’s 40% holding in Carlsberg Marston’s
Limited (‘CMBC’) for £206 million. The sale
ofour remaining stake in the beer business
marked a significant step forward in the
Company’s growth strategy, creating
financial flexibility and the opportunity for
Marston’s to be entirely focused on our
pubs, whilst retaining the benefits of the
long-term brand distribution agreement
with CMBC. We were pleased to be able
toshare details of the Company’s evolved
strategy, vision and purpose with many of
you at our Capital Markets Day in October.
Further information on our strategic priorities
can be found on page 8 and how the
Board considered our stakeholders in their
decision-making process can be found
onpage 17.
Board composition and changes
during the year
This year has seen a number of changes
tothe Board and its Committees too. In
July2024, William Rucker stepped down
asChair due to his increased business
commitments. As set out on page 55 of the
Nomination Committee Report, a thorough
external process to replace William was led
by Octavia Morley (Senior Independent
Director) and I was delighted to be appointed
upon conclusion of that process. Marston’s
isa quality business with a strong Board
andmanagement team pursuing a clear
strategy for growth, and I am looking
forward to working with the Board and the
wider team to deliver sustainable success
that will drive value for our stakeholders.
Iwould also like to take this opportunity to
thank my predecessor, who leaves behind
acapable and diverse Board of Directors
with the right mix of skills and experience
tosupport the Company in this exciting
nextchapter.
Following the announcements made in the
prior reporting year, Justin Platt joined the
Company as Chief Executive Officer on
10January 2024, and Rachel Osborne was
appointed as a Non-executive Director
andChair of the Audit Committee, with
effect from 23 January 2024. Upon joining
the Board, Justin, Rachel and I have each
received a comprehensive and tailored
induction programme, coordinated by the
General Counsel & Company Secretary.
Further detail can befound on page 56 and
each of the Directors’ biographies can be
found on pages 46 and 47.
Board performance review
Having undertaken an external Board
evaluation last year, during this reporting
period I have overseen an internal Board
performance review, discussing a number
of key items such as strategy, risks and role
of the Board, further detail on which can be
found on page 56.
Culture
A continuing focus for the next reporting
year will be refining and ensuring the right
leadership behaviours, values and culture
asan important enabler to deliver the
Company’s strategy and the transformation
programme. People engagement remains
animportant tool to provide the Board with
a valuable insight into the culture within
Marston’s and areas where improvements
can be made. Further information can be
found on page 48.
Sustainability
Through our sustainability strategy, I am
pleased to see the actions that Marston’s
istaking and the progress that has been
made towards our sustainability goals and
targets, driven by the dedicated taskforce,
and supported by the Executive Committee
and the Board. More information can be
found in our ImpactReport available on
ourwebsite www.marstonspubs.co.uk.
GovernanceStrategic report Financial statements Additional information
44 Marston’s PLC Annual Report and Accounts 2024
A new chapter
CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE REPORT
Governance and reporting
The following pages set out how we have
complied with the 2018 Code and how our
governance framework helps to support the
Company’s strategic priorities. Stakeholder
engagement continues to be a key focus;
our Section 172(1) statement on pages 14
to17 describes how the Board has fulfilled its
statutory duties under the Companies Act
2006 and how the Board has engaged with
our stakeholders during the year.
The 2024 UK Corporate Governance Code
(the ‘2024 Code’) will apply to the Company
with effect from our FY2026 with the changes
to Provision 29 taking effect a year later.
Anychanges that will impact the Company
have been reviewed and discussed by the
Board and the relevant Committees and
the required actions have been identified
toensure we have a clear pathway toward
compliance with the 2024 Code.
Annual General Meeting
I look forward to engaging with shareholders
at the Annual General Meeting (AGM) on
21January 2025. Further details about the
AGM can be found in our Information for
shareholders section on page 145.
Looking forward
Our priority for the forthcoming reporting
year is the execution of ournew strategy
and key value drivers. TheBoard and I shall
continue to support Justin and his refreshed
executive team onimplementation and
continued transformation to deliver value
creation forstakeholders and ensure the
long-term sustainable success of the
Company.
The table below shows where key content can be found in relation to the 2018 code in this
report.
Board leadership
and Company
purpose
• Our purpose, values and culture
• How we engage with our People and
ourshareholders
• What has been on the Board’s agenda
thisreporting year
Page 48
Page 48
Page 48
Division of
responsibilities
• Our governance framework and management
structure
• Details of the responsibilities ofallourdirectors
canbe found at
www.marstonspubs.co.uk/managementeam
Page 50
Composition,
succession and
evaluation
• Our approach to succession planning, training
and induction
• Board performance review
• Our approach to diversity and inclusion
Page 53
Page 56
Page 53
Audit, risk and
internal control
• Financial Reporting
• Internal processes and our Audit Committee
Report.
• Going concern and viability statements
Page 58
Page 60
Page 59
Remuneration
• Directors’ Remuneration Policy and payments
made to Directors during the period.
• Remuneration performance outcomes and
performance targets
Pages 66 to 76
Documents available at:
www.marstonspubs.co.uk
• Matters reserved for the Board
• Terms of reference for each of the
Principal Committees
• Marston’s PLC Articles of Association
• Our current Directors’ Remuneration
Policy
• Whistleblowing Policy
• Diversity, Equality & Inclusion Policy
• Tax Strategy
• Modern Slavery Statement
Financial statements Additional information
45Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE REPORT continued
JUSTIN PLATT
Chief Executive Officer
Appointed: January 2024
Justin has over 30 years’ experience in hospitality
and consumer-facing businesses, having spent
12years at Merlin Entertainments in a variety of
operational and leadership roles, including most
recently as Chief Strategy Officer. 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.
Past experience:
• Director at Carlsberg Marston’sLtd
• Chief Strategy Officer at Merlin Entertainments
• Managing Director, Resort Theme Parks, Merlin
Entertainments
• AstraZeneca plc, Global Marketing Director
HAYLEIGH LUPINO
Chief Financial Officer
Appointed: October 2021
Hayleigh was appointed CFO in 2021, having
previously been Director of Group Finance, and
held a number of senior roles previously at Marston’s.
Hayleigh is a qualified Chartered Accountant and
has strong operational and commercial credentials,
as well as extensive knowledge of both Marston’s
and the wider pub and brewing sector. As well as
the finance and treasury functions, Hayleigh also
leads the IT and Procurement functions and chairs
the D&I Taskforce helping to shape the Company’s
D&I strategy.
Past experience:
• Director at Carlsberg Marston’sLtd
• Senior roles held within Marston’s PLC
OCTAVIA MORLEY
A
N
R
Senior Independent Director
Appointed: January 2020
Octavia is currently Senior Independent Director
and Remuneration Committee Chair at Crest
Nicholson Holdings plc and Currys PLC and Chair
ofBanner Group Limited. 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:
• Non-executive Director at Ascensos Ltd
• 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
KEN LEVER
N
Non-executive Chair
Appointed: July 2024, independent on
appointment
Ken is an experienced business leader with strong
leadership skills and extensive listed company and
corporate finance experience, having held a
number of senior executive and non-executive
positions at UK listed firms across multiple sectors.
Heis currently Non-executive Chair at Cirata PLC,
Senior Independent Director at Rockwood Strategic
plc and Deputy Chair of Rainier Developments
Limited.
Past experience:
• Non-executive Chair Biffa plc
• Non-executive Chair RPS Group plc
• Senior Independent Director at
VertuMotorsplc
• Non-executive Director at Blue Prism plc
• CFO and subsequently appointed as CEO
ofXchanging plc
A
Audit Committee
R
Remuneration
Committee
N
Nomination Committee
Denotes Committee Chair
Board committees:
GovernanceStrategic report Financial statements Additional information
46 Marston’s PLC Annual Report and Accounts 2024
An experienced Board
BOARD OF DIRECTORS
RACHEL OSBORNE
A N R
Independent Non-executive Director
Appointed: January 2024
Rachel is currently a Non-executive Director and
Chair of the Audit Committee at Ocado Group Plc
and brings a wealth of recent and relevant
financial, consumer, retail and leadership
experience to the Board, most recently as CEO
ofTed Baker until June2023. She has also recently
been appointed as Non-executive Director at Cash
Access UK Ltd, with effect from January 2025.
Rachelis a qualified Chartered Accountant and
haspreviously served asthe CFO ofmultiple listed
companies including Ted Baker, Debenhams and
Domino’s Pizza Group.
Past experience:
• Non-executive Director at Dunelm Group PLC
• Non-executive Director at Her Majesty’s Court
& Tribunals Service
• Chief Executive Officer and Chief Financial
Officer of Ted Baker PLC
• Chief Financial Officer of Debenhams plc
• Chief Financial Officer at Domino’s Pizza
Group plc
• Finance Director at Vodafone PLC
SIR NICK VARNEY
A N R
Independent Non-executive Director
Appointed: July 2022
Sir Nick has over 30 years’ experience in the
Leisuresector, having started his career in FMCG
marketing with Nestle Rowntree and then with
Reckitt Benckiser plc. After 23 years as CEO of
MerlinEntertainments, he retired in 2022. Nick
isalsoaNon-executive Chair at Bath Rugby,
aNon-executive Chair at the NEC Group, and
aSenior Advisor to Blackstone.
Past experience:
• Chief Executive Officer of Merlin
Entertainments
• Managing Director at Vardon Attractions,
• Main Board Director of Vardon plc
• Marketing Director at The Tussauds Group
• Chair and Board member of UK Hospitality
BETHAN RAYBOULD
General Counsel & Company Secretary
Appointed: February 2022
Bethan joined the Company in 2013 as Legal
Counsel 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 also
leads the legal, safety, internal audit, corporate
affairs and risk functions and chairs the sustainability
taskforce which helps to shape the Company’s
ESGstrategy. Bethan is a senior solicitorwith over
15years’ experience in both private practice and
in-house roles.
BRIDGET LEA
A N R
Independent Non-executive Director
Appointed: September 2019
Bridget is currently Vice President and UK General
Manager at Snap Inc. She was previously Managing
Director – Commercial at BT Group having
previously held the role of Managing Director
(North) at JSainsbury plc and is also Pro-Chancellor
and Chairof the Board of Governors at Manchester
Metropolitan University. Bridget has hada
distinguished career working across multiple leading
retail brands in executive leadership positions
acrosssales, operations, marketing and digital
transformation. Bridget actively promotes diversity
and inclusion in all its forms and is also our
designated Non-executive Director responsible
forworkforce engagement.
Past experience:
• Managing Director – Commercial at BT Group
• Managing Director (North) at J Sainsbury plc
A
Audit Committee
R
Remuneration
Committee
N
Nomination Committee
Denotes Committee Chair
Board committees:
Financial statements Additional information
47Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
BOARD OF DIRECTORS continued
The role of the Board
The Board is responsible to shareholders for
the direction, management and promotion
of the long-term sustainable success of the
Group. It sets the Company’s strategy and
measures of success and oversees and
monitors internal controls, risk management,
governance and the viability of the Group.
In doing so, the Directors comply with their
duties under Section 172(1) of the
Companies Act 2006 (see page 14). The
Board has established certain Committees
to assist infulfilling its oversight responsibilities
which is demonstrated by the Governance
Framework on page 50.
Our purpose, values and culture
The Board is responsible for establishing the
Company’s purpose, values and strategy
and confirming that these, and its culture
are aligned. As part of this year’s strategic
review, the Company’s strategy and purpose
were revisited, as described in more detail
inthe Strategic Report on pages 8 and 9.
The Board oversees the implementation of
the strategy, within the context of our values
and culture.
One of the key enablers of the value drivers
is ensuring that our teams are performance
driven. To support this, the Company is in the
process of refining its behaviour framework
and values to ensure they accurately reflect
the development of our business and
capture the very essence of Marston’s.
Marston’s has a unique culture and an
environment that fosters collaboration and
a real passion for what we do and providing
great guest experiences. Our People have
responded to the challenges the sector has
faced over the last few years with tenacity
and determination, which has contributed
to the growth of the Group and strengthened
Marston’s culture. The Board is focused
onensuring that the strength of Marston’s
culture is maintained as part of the change
management processes in place to deliver
the strategic priorities.
Marston’s culture is underpinned by our
values and our People Promise. That is
aframework of engagement, support and
development that attracts, retains and
supports the best people.
How the Board monitors culture
The Board plays a vital role in monitoring
and assessing the culture at Marston’s and
its alignment with our purpose, values and
strategy, including leading by example and
acting in accordance with our values and
ethics. This year, the Board has monitored
culture in the following ways:
Reviewing KPIs and management reports –
KPIs, including EHO scores and employee
engagement, allow trends and changes
inthe culture of the Group to be monitored.
KPIs are reported on a monthly basis and
included within the Management Information
Pack. The Director of Safety presented to
the Board during the reporting year on EHO
progress and how the key health and safety
principles and ways of working will enable
our business to continue to operate safely
and sustainably.
Leadership behaviours – As part of the
strategic review, the Board discussed the
importance of values and behaviours and
in particular, the expectations of senior
leadership that will be critical to the delivery
of strategic priorities. Supporting and
monitoring these will be afocus of the
Board in the coming months.
Risk management – The Audit Committee
monitors risk management processes and
controls on behalf of the Board, receiving
reports at each meeting from the Risk and
Internal Audit team (see page 36). A detailed
report was considered from theEmployee
Relations (ER) Team whose key aims include
upskilling line managers, reducing risk and
driving engagement through fairness and
justice. The Committee also considered
howthe ER Team’s expertise could be
broadened to support our PubPartners.
Employee engagement – Measurement
ofour employee engagement is through
monthly surveys which provide valuable
insight into engagement and culture,
helping to inform our Board-level workforce
engagement programme. More details can
be found on page 15. Senior leaders within
our HR team presented an update on the
outcomes and proposed actions from the
most recent workforce engagement session,
together with proposals for the nextstage
ofour D&I strategy, including thelaunch
of‘Care to Share’ in the reporting year,
asdetailed on page 15.
Whistleblowing – our Speak Up whistleblowing
system facilitates the reporting of matters
ofconcern by our People.
The Audit Committee, with delegated
authority from the Board, receives a report
on whistleblowing matters from our Internal
Audit team each year. This year the
Committee reviewed theimplementation
ofthe online portal and its impact on the
confidence of our People to speak up and
considered proposals tofurther strengthen
the whistleblowing governance framework,
supported by senior leaders within the
business.
Engaging with our Stakeholders
As a Board, we understand the importance
of engaging with all of our stakeholders.
Itisintrinsic to our values, our decision
making and ensuring the long-term success
of the business. Our Section 172(1) statement
on page 17 sets out where the Board has
engaged with our key stakeholder groups
throughout the year and also the impact
onthe decisions that have been made
atBoard level.
Board agenda and activities
duringtheyear
During the reporting year, the Board
meteight times, in person, for scheduled
meetings, all of which were held either
atour Pub Support Centre (PSC) in
Wolverhampton, or at one of our pubs.
Additional ad hoc Board callswere
convened as appropriate to discuss matters
arising between meetings. This includes
approval of matters of a transactional
nature, for example, the disposal of our
investment in CMBC. The annual Board
strategy session is held over 2days,
comprising one ‘day in trade’ and the
otheras a meeting itself.
GovernanceStrategic report Financial statements Additional information
48 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPOSE
The annual Board strategy session enables
the Board time to meet and engage with
our guests, People and Pub Partners and
tobring to life the concepts discussed as
part of the review of strategy. This year, the
Board visited a cross-section ofour pubs
inShropshire and Staffordshire and the
meeting was held at the Hollybush in Penn,
Wolverhampton.
Board agendas are set in advance of
eachmeeting and follow a 12-month rolling
forward agenda which helps to shape
thediscussions and focus of each meeting.
Attendance at scheduled Board and
Committee meetings is set out in the
Governance Summary section, on page 43.
The key items that the Board have discussed
this year are show in the adjacent table and
more information on how the Board has had
regard to our stakeholders when discussing
these key items can be found on page 17.
The Board also receives a detailed
management information pack at the
endof each monthly period, which reports
on KPIs, capital returns and 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 overthe course of a
year. Sufficient time is also allocated on the
Board annual calendar, for the Chair to
meet privately with the Senior Independent
Director (SID) and Non-executive Directors
(NED)s, without the Executive Directors, to
discuss any matters arising together with the
operation of the Board and Committees.
The SID and NEDs also meet at least once
ayear without the Chair being present.
On the Board’s agenda this year:
Strategy and
operational
• Considered and approved the strategic review and business transformation process
• Considered and approved the disposal of our remaining 40% investment in CMBC
• Received performance reviews and reports on KPI attainment
• Received updates on estate review and format classification
• Considered materials for the Capital Markets Day
• Received reports on market and sector analysis
• Received regular reports from the CEO and CFO on business performance and people
• Received an update on IT security and governance
Finance
• Review of financial systems and systems of internal control
• Assessing debt structure, leverage and capital allocation framework
• Discussion with advisers on refinancing considerations
• Approval of budget for FY2025 and shape of the five-year plan
• Considered viability statements and going concern
• Reviewed and approved the half year and full year results announcements, the trading updates issued
during theyear and Annual Report and Accounts, following recommendations from the Audit Committee
People, culture
anddiversity
andinclusion
• Reviewed and approved the annual Gender Pay Gap report
• Received reports and actions plans following board-level workforce engagement
• Received an implementation update on D&I strategy
• Received employee engagement reports
• Discussed the behavioural expectations of senior leadership to delivery strategy and related values
Governance
and risk
• Reviewed principal risks and risk appetite
• Received reports on health and safety and other key areas of compliance
• Reviewed and approved a report and the annual statement on the Modern Slavery Act
• Approved the Terms of reference for each of the principal Committees and Matters Reserved for the Board
• Undertook an internal Board performance review
• Reviewed and approved the renewal of delegated authorities
Sustainability
• Reviewed proposals for the transition to Net Zero and associated targets
• Reviewed TCFD recommendations, Scope 3 emissions calculations and targets
Financial statements Additional information
49Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
BOARD LEADERSHIP AND COMPANY PURPOSE
Corporate governance framework
The Company has a mature corporate
governance framework which was
established to provide clear lines of
accountability and responsibility. The
governance framework shown here provides
a structure of effective management
andcontrols to measure and assess
performance and risk. It also helps ensures
decision making takes place at appropriate
levels within the Group. The framework is
regularly reviewed, and the Board believes
the continued framework helps ensure
weadopt corporate governance principles
in away that is relevant to our business,
supports our strategy and is consistent with
our values.
The Board
Responsible for effective leadership by reviewing and challenging the strategy developed and proposed
by management and overseeing performance, governance and delivery of strategy in a way
that enables 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35
Principal Committees
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
Sustainability
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
Management
Committees
Executive Committee
Comprising the CEO,
CFO, Chief Development
Officer (CDO), Chief
Operating Officer (COO),
Commercial Marketing
Director (CMD), HR
Director (HRD) and
General Counsel &
Company Secretary
Investment Committee
Chaired by the CDO and
comprising the COO,
HRD and members of the
Leadership Group
Disclosure Committee
Comprises CEO, CFO and
General Counsel &
Company Secretary
GovernanceStrategic report Financial statements Additional information
50 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
DIVISION OF RESPONSIBILITIES
The three principal Committees of the Board
are the Audit Committee, the Nomination
Committee and the Remuneration
Committee. Each has its own terms of
reference which are reviewed annually
before they are considered and approved
by the Board. Further information of the role
and remit of each Committee, together
with key matters arising during the reporting
year, can be found on pages 52, 58 and 61.
This year our Corporate governance
framework was strengthened by the
addition of an Investment Committee. This
isan executive management committee
chaired by the Chief Development Officer
and comprising the Chief Operating Officer,
Chief Marketing Director, HR Director and
members of the Leadership Group. The
Investment Committee provides executive-
level accountability and support for
Investment decisions by reviewing and
approving significant capital expenditure
and potential acquisitions within specified
authority limits delegated by the Board.
TheInvestment Committee also reviews
expenditure to ensure that returns are in line
with expectations, and will report to the
Executive Committee and the Board on
these regularly to ensure accountability
andvisibility.
The Executive Committee is led by the Chief
Executive Officer and is responsible for the
day-to-day running of the business. It meets
monthly to discuss financial and trading
matters, strategic implementation plans,
business risks, employee engagement,
health and safety, and receives periodic
presentations on other areas of the business.
The Executive Committee also meets
informally on a weekly basis to discuss sales
performance and any key matters arising
for the week ahead.
To further strengthen the skills and experience
of management and to provide greater
accountability for delivery of key strategic
deliverables, a number of important
changes were made to the Executive
Committee in the reporting year with
theaddition of a Chief Development Officer
and Chief Operating Officer.
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 continuous
disclosure obligations. This year the
Disclosure Committee met three times all in
relation to the Group’s disposal of CMBC,
further details of which can be found on
page 12, and once in relation to the change
in CEO.
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. A report on the activities of the
supporting committees is provided tothe
Audit Committee each year.
There is a clear division of responsibilities
between the Chair and the Chief Executive
Officer, and a high-level summary of those
roles is shown below. Each of the Board
members and the General Counsel &
Company Secretary have clearly defined
roles and responsibilities, further details
canbe found on our website,
www.marstonspubs.co.uk/investors.
Chair – Ken Lever is responsible for:
• Leading the Board and itsoverall
effectiveness
• Setting the agenda for Board meetings,
and ensuring the style and tone of
meetings enable constructive debate
• Supporting the CEO in articulating and
promoting the purpose, values and
culture of the Company
• Ensuring the Company has an effective
strategy and that there is a high-calibre
CEO and management team able
tosupport the CEO to implement the
strategy
• Engages with stakeholders and ensures
their views are understood and considered
appropriately in Board decision making
• Ensuring that the Company operates
toahigh standard of governance in line
with its governance framework
Chief Executive Officer – Justin Platt is
responsible for:
• The day-to-day running ofthe business
• The development and implementation
ofthe strategy and the Group’s overall
performance
• Setting and implementing the strategic
objectives 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
• Reporting to the Board on all material
matters affecting the Company and
itsperformance
• Ensuring the Board is aware of investor
and other stakeholder views
Financial statements Additional information
51Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
DIVISION OF RESPONSIBILITIES
DEAR SHAREHOLDER,
I am pleased to present my first Nomination
Committee (the Committee) Report on
behalf of the Board and update on the
Committee’s activities during the reporting
year. Attendance at Committee meetings
isshown on page 43, in the Governance
summary.
Board appointments
As previously reported, there were a
number of key changes to the composition
of the Board during the reporting year,
including my own appointment as Chair of
the Board. Our Senior Independent Director,
Octavia Morley, led a thorough and
independent process ahead of my
appointment and full details can be found
on page 55. In January 2024, we welcomed
to the Company both Justin Platt as CEO
and Rachel Osborne as Non-Executive
Director and Chair of the Audit Committee
and further details can be found on page
65 of the 2023 Annual Report & Accounts
(available at www.marstonspubs.co.uk).
Board performance review
Following an external Board performance
review in 2023, this year, in accordance with
the Committee’s Terms of Reference, the
Committee undertook an internal review
ofthe Board and its Committees, led by
myself. Further details and agreed actions
are set out on page 56.
Diversity and inclusion
We continue to develop our diversity and
inclusion policy and are committed to
enhancing diversity within our talent
pipeline and the business. From a Board
perspective, whilst we do not currently
setformal diversity targets, we recognise
theimportance of a balanced Board
comprising individuals representing a
widecross-section of experience, cultural
backgrounds and specialisms and our
disclosures on Board and management
diversity are set out on page 54.
Looking forward
We are committed to regularly reviewing
and updating our succession plans. Following
the review of strategy this year, a number of
key appointments to our Board and senior
management team have already been
made having considered the strength,
depth and diversity of the talent pipeline,
aligned to our strategy. Our priority for the
coming year will be to continue to promote
effective Board and leadership succession,
making sure it is fully aligned to the Group’s
strategy.
KEN LEVER
CHAIR OF THE NOMINATION COMMITTEE
Our responsibilities
• To monitor the composition of the
Board and its Committees, to ensure
the right balance of skills, experience
and knowledge and recommending
any changes to the Board.
• 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.
• Leading the process for Board
appointments and making
recommendations to the Board.
• Assessing whether Directors can
commit sufficient time to fulfil their
responsibilities.
Two scheduled Committee meetings
were held during the year, together
withan additional four meetings held
inrelation to Board appointments.
Attendance at the scheduled meetings
isshown on page 43.
The Committee, under the chairmanship
of Ken Lever, currently comprises all of
the Non-executive Directors who are all
independent. The Company Secretary
attends all Committee meetings, and the
Executive Directors, senior management
and external advisers may be invited to
attend from time to time.
Key activities during the
reporting year
• Recruitment and appointment of
newChair, Ken Lever (led by Octavia
Morley (SID)).
• Approved the appointments of
JustinPlatt and Rachel Osborne.
• Reviewed the structure, diversity, size
and composition of the Board and
considered Board succession planning.
• Considered this year’s internal Board
evaluation process.
• Reviewed the terms of reference
andeffectiveness of the Nomination
Committee and updates required by
the UK Corporate Governance Code.
• Reviewed the independence,
contribution and time commitment
ofeach Director and any conflicts
ofinterest.
• Considered and approved each
Director standing for election and
re-election at the 2025 AGM.
Members
Ken Lever (Chair) – from 8 July 2024
Octavia Morley
Rachel Osborne – from 23 January 2024
Bridget Lea
Nick Varney
Matthew Roberts – until 23 January 2024
William Rucker – until 8 July 2024
GovernanceStrategic report Financial statements Additional information
52 Marston’s PLC Annual Report and Accounts 2024
Nomination Committee report
CORPORATE GOVERNANCE REPORT continued
Board appointments and
succession planning
The Board has delegated responsibility
tothe Committee for monitoring the
composition of the Board and its
Committees, to ensure the right balance
ofskills, experience and knowledge and,
where necessary, recommending any
changes to the Board. This process includes
reviewing the current composition of the
Board, the skills, experience and tenure
ofthe Directors and addressing any gaps.
This is reviewed on an annual basis through
Board performance reviews and by the
Committee.
The Committee follows a transparent and
thorough selection process for any new
appointments to the Board supported by
external specialist consultants. The skills
andexperience criteria for any incoming
Directors are discussed and agreed by the
Committee before the recruitment process
is commenced. Further information on
therecruitment and selection process for
Ken Lever is on page 55.
To support the delivery of the strategic
priorities, next year the Committee looks
forward to taking an active interest in the
quality and development of talent, ensuring
that appropriate opportunities are in place
to develop high-performing individuals.
Capability, talent attraction and retention
are key enablers of continued positive
performance of the Group.
Diversity and inclusion
We are committed to building an inclusive
culture where our People, Pub Partners
andguests feel welcome and included for
who they are and enjoy the benefits that
diversity and inclusion brings. We have a
responsibility to create safe environments
where our teams and guests feel respected,
valued and belong.
‘Come As You Are’ is our Diversity and
Inclusion (D&I) strategy, which sets out our
intentions of Marston’s being a ‘great place
to work’ and where everyone feels like
theycan be themselves. Our D&I strategic
priorities include encouraging allyship and
acting as role models, as well as staying
informed through our dedicated training
modules on Campus, our employee
e-learning platform.
During the reporting year, the Board
received an update on the D&I strategy
and key initiatives, which this year included
the launch of our ‘Care to Share’
campaign, with the aim of collecting
diversity data for our People, in a secure
and sensitive way, through our Your Voice
engagement surveys. By understanding
who works at Marston’s we can identify
opportunities that will in turn help to inform
our D&I strategy and sustainability agenda
and take positive action to promote
equality.
Hayleigh Lupino, Chief Financial Officer,
chairs the Inclusion taskforce which is
responsible for delivering the D&I strategy.
The taskforce is comprised of a broad cross
section of senior leaders and employee
network group members. The taskforce
isfocused on driving change to support
ourbusiness, its people and the guests
andcommunities that we serve.
This year our D&I strategy was reviewed by
an organisation called ‘inclusion in’ to help
us to understand, in an objective way, what
progress and impact we have made in D&I
compared to other companies in our sector.
As we continue to adapt to shifting
consumer and employee preferences and
dynamics, the ability to grow diverse talent
Annual statement on Board and Executive Committee diversity targets
In accordance with Listing Rule 6.6.6R(10), our Board and Executive Committee gender and
ethnicity data, as at 28 September 2024, is provided below. We currently meet or exceed
the targets set out in the Listing Rules.
Target Marston’s progress
1. At least 40% of the individuals on the
Boardof Directors are women.
57% of Board Directors are women.
2. At least one of the following senior positions
on the Board of Directors is held by a
woman: (a) the Chair, (b) the Chief
Executive, (c) the Senior Independent
Director (SID) or, (d) the Chief Financial
Officer (CFO).
Both the SID and CFO positions are held
bywomen.
3. At least one individual on the Board of
Directors is from a minority ethnic
background.
Two of our Board Directors identify as
beingfrom an ethnic minority background.
and create an inclusive environment is
ofincreasing importance and therefore
soismeasuring our impact. Following a
comprehensive analysis of our D&I maturity,
we were awarded a score of 70 against an
industry average of 66. Marston’s was also
considered to be ‘strategic’ and was
commended for: (1) inclusion being
embedded throughout the employee and
customer experience; and (2) leaders being
given the skills to lead inclusively and have
accountability frameworks in place for
creating a diverse and inclusive workplace.
Further information on this and Marston’s
D&I strategy and key areas of focus can be
found in our Impact Report, available on
our website www.marstonspubs.co.uk.
Financial statements Additional information
53Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
NOMINATION COMMITTEE REPORT
Senior Managers
(Executive Committee and Leadership Group)
Female
44%
Male
56%
Gender balance of wider workforce
Female
5,630
Male
4,475
The Board and Executive Committee changes outlined on pages 3 and 4, are reflected in
the data below.
New Directors are asked to consider participating in the ‘Care to Share’ campaign as part
of their onboarding process in the same way, and for the same reasons, we ask our wider
workforce to share their data.
Number
of Board
members
Percentage
of the Board
Number of
senior
positions on
the Board
(CEO, CFO,
SID and
Chair)
Number in
Executive
Management
Percentage
of Executive
Committee
Men 3 43% 2 4 57%
Women 4 57% 2 3 43%
Other categories
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 71% 3 6 86%
Mixed/Multiple Ethnic
Groups 2 29% 1 1 14%
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 and are also included in the columns
related to the Board.
GovernanceStrategic report Financial statements Additional information
54 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
NOMINATION COMMITTEE REPORT
Conflicts of interest
Prior to the appointment of any Non-
executive Director, the Committee considers
any existing appointments or commitments
to ensure that there are no, nor likely to be
any, conflicts of interest and that Directors
have sufficient time available to properly
discharge their duties to Marston’s. Any
additional external appointments taken up
by Directors during the year are considered
by the Chair of the Committee and, where
applicable, approved by the Board prior to
the Directors accepting such appointments.
The Committee considers any conflicts
thatmay arise as a result of any external
appointments taken up by the Directors
andthe Board monitors the extent of those
interests and the time commitment required
to fulfil them to ensure that effectiveness
isnot compromised. The Board remains
confident that each Director has devoted
suitable time to undertake their responsibilities
effectively and no conflicts of interest
wererecorded during the year that would
impact the independence of any of our
Directors.
Appointment of Ken Lever as Chair
As Senior Independent Director, I led the Committee in the search and appointment of Ken Lever as Chair following the
announcement, in March 2024, that William Rucker would be stepping down due to his increased business commitments.
The Committee met in March to discuss and agree the skills and experience criteria for the role, taking into account the skills matrix
of the current Board and the future needs of the Company in light of the strategic review during the reporting year.
Following a short tender of executive search agencies, to ensure the right expertise and ability to meet the Committee’s criteria and
timeline, the Company appointed Korn Ferry as independent executive search consultants to assist with the search and recruitment
process. Korn Ferry act as advisers to the Remuneration Committee but the Executive Reward team is separate from the Executive
Search team, so the Committee were able to satisfy themselves on independence and confidentiality.
A scoring matrix based on the search criteria was applied to a longlist of potential candidates produced by Korn Ferry which
produced a shorter list for the Committee’s review. The Committee collectively agreed a final shortlist of candidates, all of whom
were interviewed by me and supported by the General Counsel & Company Secretary. From that shortlist several candidates were
invited to attend asecond interview, which involved meeting at least two other Non-executive Directors and the CEO. Following
those interviews, the Committee convened a further meeting to discuss feedback and references received on each of the
candidates. The Committee was supported by Korn Ferry in these meetings.
Following the Committee’s recommendation to the Board, Ken was offered the position, and I was delighted that he accepted, with
effect from 8 July 2024. Ken brings more than 30 years’ PLC and corporate finance experience, is an experienced business leader
and has already brought tremendous insight to our boardroom.
The General Counsel & Company Secretary arranged a comprehensive, tailored induction programme for Ken, which included:
• Dedicated time with the Non-executive Directors, the Executive Team and key stakeholders including the Director of Corporate
Risk and Director of IT
• Meeting with all key advisors and many of our shareholders
• A handover from the incumbent chair
• Scheduled trips to our pubs and ‘days in trade’ with some of the management team
• Refresher Training on Director duties, including Section 172(1), the Market Abuse Regulation and the 2018 Code, and Data Protection
• Deep dive sessions with senior management on key issues including strategy, five-year plan and capital structure, principal and
emerging risks and related controls, people strategy, cyber risk and controls and ESG
OCTAVIA MORLEY
SENIOR INDEPENDENT DIRECTOR
Financial statements Additional information
55Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
NOMINATION COMMITTEE REPORT
Board support, inductions
andongoing development
Upon appointment to the Board, each
newDirector receives a comprehensive
induction programme co-ordinated by
theGeneral Counsel & Company Secretary,
which is tailored totheir past experience
and specific role onthe Board. Induction
programmes aretailored based on
experience and background and the
requirements of the role, and further
information on the induction of Ken Lever
completed during the reporting year can
be found on page 55. Pub visits are an
important part of the induction process,
aswell as for continuing education and
employee engagement. Further information
on Board engagement with stakeholders
isset out on pages 14 to 17.
It is also important that the Directors
regularly refresh and update their skills and
knowledge and receive relevant training
when necessary. Ongoing training and
development needs are reviewed annually
and arranged by the Company Secretary,
where requested. Directors are also entitled
to seek independent advice about the
performance of their duties, if required,
atthe Company’s expense. Through the
Company Secretary, the Directors also have
access to various advisory services enabling
them to attend seminars and training events
to keep up to date on relevant developments.
Board independence, election
andre-election of Directors
All of our Non-executive Directors are
considered by the Board as being
independent, including our Non-executive
Chair who was independent upon
appointment.
Ken Lever is subject to election for the
firsttime at the Company’s AGM in
January2025 and all other Directors will
offer themselves for re-election. Details
ofeach Director are set out on pages 46
and47, and in the 2025 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.
Board performance reviews in action:
2023 focus areas 2024 progress and actions Focus areas for 2025
Strategy and role of the
Board: focus on strategic
choices and clearer
measures
Development of new strategy
and measures sponsored by
the Board
Develop KPI dashboard to
monitor progress of key strategic
measures
Investment Committee
established to oversee major
capital investments and provide
post-investment appraisals.
Engagement and stakeholder
sentiment: consider
information flow
Time on the Board agenda for
presentations by brokers and
reviewed key advisors tobring
fresh perspectives tothe
boardroom
Time on the agenda to debate
market dynamics and guest
sentiment.
Leadership and succession
plans: board to review its own
governance
Refreshed Executive team
and consideration of talent
and behaviours as part of
thestrategic review
Consider expanding role of
Nomination Committee to
include employee engagement
and improved talent reviews.
Risk and governance Reviewed principal and
emerging risks
Improved alignment to strategy.
Board performance review
The annual performance review process provides the opportunity for the Board and
its Committees to consider and reflect on the effectiveness of its activities, the quality
of its decision-making and the contribution made by each Director.
In compliance with the 2018 Code, and the typical three-year evaluation cycle, this
year’s evaluation was conducted internally, following the independent externally led
process in the previous year.
During the reporting year, supported by the General Counsel & Company Secretary,
Ken Lever held confidential one-to-one meetings with every Board member and the
HR Director, to discuss their views on a number of themes previously discussed and
agreed by the Committee, including strategy, risks, the role of the Board and the flow
of information to and from the Board.
In addition, Ken also met with the consultant instructed by the Company in the 2023
external evaluation to obtain a stand-back view to support these conversations, as
well as Ken’s own induction to the Board. Following those meetings, clear actions
were agreed at a Board meeting and further details are set out below:
GovernanceStrategic report Financial statements Additional information
56 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
NOMINATION COMMITTEE REPORT
DEAR SHAREHOLDER,
I am pleased to present my first Audit
Committee (the Committee) Report for the
financial year ended 28 September 2024 for
Marston’s, which provides an overview of
the areas of focus for the Committee during
the year, as well as its key activities and the
framework within which it operates. I would
like to thank Matthew Roberts, who left the
business in January 2024. Other than the
change of Audit Committee Chair, the
composition of the Committee has not
changed and is set out on page 58.
I confirm I have recent and relevant financial
experience, and the Board remains satisfied
that the Committee members as a whole
have the appropriate skills, knowledge and
experience to fulfil the duties delegated
toit, together with competence in the
hospitality sector.
This report describes the work of the
Committee during the reporting year, with
afocus on issues relevant to the Group’s
financial reporting. This includes how the
Committee ensures the ongoing quality
ofthe related disclosures, the Group’s risk
management framework and internal
control systems together with deep dives
onassurance, in key compliance and
operational areas, such as food safety and
cyber controls.
The Committee and I are mindful of the
implementation date for the 2024 Code,
particularly the revisions to provision 29,
together with emerging legislation, such
asthe Economic Crime & Corporate
Transparency Act 2023. We have dedicated
time to understanding the impact of the
changes to the regulatory and governance
landscape, together with the Group’s
reporting obligations, and work is underway
to ensure we have a clear pathway towards
compliance.
Following their appointment as external
Auditor for the Group, RSM UK Audit LLP
(“RSM”) have completed their first full year
audit and their report is set out on page 81.
During the reporting year, we have also
engaged with the Financial Reporting
Council (FRC) following their evaluation of
our Annual Report and Accounts for FY2023.
We welcome any engagement with the FRC
and, as a result of our communications, we
have an enhanced disclosure in this years’
Annual Report and Accounts, further detail
of which is set out on page 60.
The Committee remains keen to engage
with shareholders on any audit related
matters. Should you have any comments on
the contents of this report, please contact
me via email sent c/o of Audit Chair at
investorrelations@marstons.co.uk.
RACHEL OSBORNE
CHAIR OF THE AUDIT COMMITTEE
Financial statements Additional information
57Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
Audit Committee report
CORPORATE GOVERNANCE REPORT continued
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.
• Monitoring the effectiveness of the
Company’s audit processes, internal
and external controls and risk
management systems.
• Reviewing 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reporting year.
The Audit Committee met four times
during the reporting year and
attendance can befound on page 43.
The Director of Corporate Risk and RSM
(the external Auditor) attend each
meeting. Non-members including the
Board Chair, theCEO, the CFO and other
senior managers are invited to attend
allor part of the Committee meetings.
Inadvance of each meeting the Committee
Chair meets with the key stakeholders and
contributors including the CFO, the
Company Secretary, the Director of Risk,
Head of Internal Audit and the external
Auditor to discuss any key matters arising.
In the Committee meetings, the Chair
encourages robust conversations to ensure
management are appropriately
challenged, in order to that the Committee
can satisfy itself that the judgements taken,
and the disclosures made are appropriate
for the Group.
Key activities during the
reportingyear
• Reviewed the interim results and full year
accounts, including the significant
judgements and estimates, going
concern and viability statements and
recommended approval to the Board.
• Reviewed and challenged the external
Auditor’s audit strategy and year-end
and half-year reports.
• Oversaw the external Auditor’s
independence, objectivity and
effectiveness.
• Reviewed the Company’s principal and
emerging risks, together with the framework
for managing, mitigating and testing of
those risks, and any emerging legislation.
• Considered the forthcoming
requirements and impact of the 2024
Code and the Economic Crime &
Corporate Transparency Act 2023 and
preparedness of the Company to comply.
Members
Rachel Osborne (Chair) –
from 23 January 2024
Octavia Morley
Bridget Lea
Matthew Roberts – until 23 January 2024
• Received updates and presentations
from management on internal audits,
including allergens, stock and network
securit y.
• Reviewed and approved the annual
internal audit plan for financial year
FY2025.
• Considered the recommendations
bythe FRC following the review of the
2023 Annual Report and Accounts,
and approved improved disclosures
inrespect of the reporting period.
• Assessed the effectiveness of the
Company’s Whistleblowing Policy –
‘Speak Up’.
• Reviewed the results of the annual
evaluation of the effectiveness of the
Committee.
• Received updates on and approved
the Statutory Pubs Code compliance
report.
• Reviewed the outputs from the annual
Property valuation report, including a
meeting between the Chair of the
Committee and the independent
property valuers (Christie & Co).
• Reviewed the Non-Audit Services
Policy and the external Auditor’s
non-audit fees (of which there were
none in the reporting year).
• Reviewed and approved the
Committee’s updated Terms of
Reference and carried out our
responsibilities as set out in the Terms
of Reference.
Matters considered in relation
tothe Financial Statements
In order to discharge its responsibility
toconsider accounting integrity, the
Committee carefully assesses key
judgements applied in the preparation
ofthe consolidated financial statements,
which appear on pages 88 to 140.
Key accounting judgements
All key accounting judgements were
subject to review and challenge by the
Committee and were discussed and
addressed with external Auditor throughout
the year end 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
which were reviewed by the Committee
are:
• Non-underlying items – determination of
items to be classified as non-underlying.
• CMBC – classification of results from
CMBC as discontinued operations.
• CMBC – estimated recoverable amount
of the investment in associate immediately
prior to disposal.
GovernanceStrategic report Financial statements Additional information
58 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
AUDIT COMMITTEE REPORT
• Property, plant, and equipment –
valuation of effective freehold land
andbuildings.
• 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.
The Committee has reviewed management’s
assessment and classification of the
abovejudgement and, in line with
guidance received from RSM, is satisfied
that the correct accounting treatment
hasbeen applied.
Estate valuation
The Group is in the third and final year of its
three-year valuation cycle, with Christie &
Co completing physical inspections of the
final third of the Group’s estate with the
focus remaining on the inspection of pubs
where there have been changes to the
shape of the estate, including capital
expenditure. The Committee reviewed and
considered the outputs from the valuation
and, as part of the year-end process,
RSM’sthird party specialist valuer and the
Committee Chair, met with Christie & Co to
consider and challenge their methodology
and approach. The Committee noted that
the carrying value of the Group’s estate
and other fixed assets is £2.1 billion and,
asaresult of the valuation and leasehold
impairment review, there is an effective
freehold impairment reversal of £45.3 million
and a leasehold impairment reversal of
£1.7million. Further details are set out on
p a g e 111.
Market capitalisation
The Group has performed an assessment
tobridge the gap between the Group’s
market capitalisation and asset values to
determine whether further impairment
considerations are required in relation to
theGroup’s material assets, property, plant
and equipment. The recoverable amount
adopted in this assessment was the higher
of the enterprise value and the value in use
of the Group. This assessment was reviewed
by the Committee and the Committee
noted that, as indicated by the review, there
was sufficient headroom between the asset
values and the recoverable amount of the
Group and that no reasonably possible
change in the assumptions used in this
assessment would have resulted in a
change to the Group’s asset values.
Going concern
During the year, the Committee and the
Board reviewed the Group’s going concern
and viability statement as set out on page
42. As part of the reporting process, the
Group is formally required to assess and
disclose the extent to which its forecasts,
financing requirements and financial
covenants may or may not affect the
Group’s going concern assumption in
preparing the financial statements.
The conclusion of this assessment, having
considered the Group’s forecast financial
position and exposure to principal risks
anduncertainties, including cost and
inflationary pressures, and incorporating
additional increases to employee related
costs following the Autumn Budget 2024,
was that the Board through the Audit
Committee, have a reasonable expectation
that the Group has adequate resources to
continue to operate within its borrowing
facilities and covenants for a period of at
least 12 months from the date of signing the
financial statements. Accordingly, the
Committee notes that the financial
statements have been prepared on the
going concern basis and more details can
be found in Note 1 of the Financial
Statements on page 96.
Audit reforms and the 2024 Code
The Committee continues to stay abreast of
corporate governance reforms and reviews
the Company’s preparedness at each
meeting, with a particular focus on
enhanced internal controls and the
associated reporting of their effectiveness.
The 2024 Code will apply to the Company
with effect from its FY2026 year, with the
changes to Provision 29 taking effect a year
later, in FY2027, and the required actions
have been identified to ensure we have a
clear pathway to compliance.
External Auditor
RSM were appointed as the external Auditor
of the Company at the 2024 AGM, following
a tender process in 2023, which was
described on page 69 of the 2023 Annual
Report & Accounts. The Group’s lead audit
partner is Ian Wall, who was also appointed
in 2024. The Company’s relationship with
theexternal Auditor is managed through
their attendance at each meeting of the
Committee, together with regular meetings
during the year with the Chair of the
Committee, both with and without
management present. This provides
sufficient opportunity to interrogate and
challenge key areas and assess their
independence. RSM present their audit
strategy and reports, which include key
audit risks and audit findings, to the
Committee and these reports are discussed
and challenged throughout the audit cycle.
Non-audit services and
safeguarding objectivity
An external Auditor should not provide
non-audit services where it might impair
their independence or objectivity and the
Committee has established a policy to
safeguard such independence and
objectivity, which is available at our website
www.marstonspubs.co.uk. All non-audit
services are considered on a case-by-case
basis in light of the requirements of the
ethical standards and in compliance with
our policy. The Committee confirms that
RSM did not carry out any non-audit work
during the reporting year. In addition, the
external Auditor follows its own ethical
guidelines and continually reviews its audit
team to ensure that its independence is not
compromised.
RSM has reported to the Committee that, in
its professional judgement, it is independent
within the meaning of regulatory and
professional requirements and the
Committee is satisfied that RSM meets the
required standard of independence to
safeguard the objectivity and integrity of
the audit.
Following a review during the reporting year,
RSM have also confirmed they are satisfied
with the objectivity and independence
ofthe component auditor of CMBC,
PwCDenmark.
Financial statements Additional information
59Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
AUDIT COMMITTEE REPORT
Effectiveness of external Audit
The effectiveness of the external audit is
considered throughout the reporting year in
a number of ways, including assessment of
the degree of the audit firm’s challenge of
key estimates and judgements made by
thebusiness, feedback from any external
orinternal quality reviews on the audit
andthe quality of communication with the
Committee. Upon conclusion of all audit
matters, as a matter of good practice, the
internal audit team has been instructed to
undertake a review of the external audit
process and report its conclusions to the
Audit Committee.
Review by the FRC
During the reporting year, we have
engaged with the FRC following their
evaluation of the 2023 Annual Report &
Accounts as part of the FRC’s ongoing
assessment of the quality of corporate
reporting in the UK. We welcome the FRC’s
engagement and, as a result of our
communications, we have enhanced our
disclosures by providing further detail on
thelevel 3 valuation inputs to the fair value
measurement of effective freehold land
and buildings.
Risk management and internal
control
Our risk management and internal control
framework is described on page 35. During
the year as part of the strategic review,
theCommittee supported the Board in
reviewing the Principal Risks and emerging
risk, with a particular focus on the
effectiveness of risk controls and their
assurance. A focus for the Committee next
year will be to continue to focus on risk
mitigation, controls and ensure these align
with risk appetite as we seek to embed
these more firmly as part of our routine
processes and decision making, to support
and improve strategic planning and
execution.
Internal audit
The Committee continues to oversee the
assurance activity conducted by the
internal audit function, which is managed
by the Director of Corporate Risk who
attends each meeting. During the reporting
period, the Committee allocated additional
time on the agenda to review and
challenge the findings of several key audits
and subsequent management actions,
including in relation to safety risks, stock
controls and network controls. In addition,
the Committee monitored delivery of the
FY2024 internal audit plan, considered the
findings from all internal audit reports and
ensured that management actions
identified were implemented or on track
and challenging management where
necessary. The Committee also approved
the internal audit plan for FY2025.
Whistleblowing
As a Company, we remain committed to
conducting our business with honesty and
integrity and our Whistleblowing Policy
supports this. A well-established procedure
is in place for employees to report any
concerns anonymously and confidentially
through our online ‘Speak up’ portal. Posters
publicising whistleblowing channels are
distributed to our pubs and our pub support
centre and a prominent link is available
onthe Company’s intranet and website.
TheCommittee receives a report on
whistleblowing each year, to understand
and review the whistleblowing governance
framework, processes and controls, and
how any emerging trends are identified,
mitigated and managed.
Business ethics
The Company remains committed to
highstandards of business integrity and
ethical conduct. Our Directors, Executive
Committee and Leadership Group
members undertake training in business
ethics, which includes the Bribery Act, the
Company’s Corporate Hospitality and Gifts
Policy, directors’ duties and share dealing.
Our standards are supported by appropriate
policies which are accessible in the digital
employee handbook.
The Company also has a detailed Anti-
Bribery and Corruption Policy and maintains
a Gifts and Hospitality Register. Anti-bribery
expectations are set out in standard
purchasing terms and conditions.
Statutory Pubs Code
The Audit Committee approved the
compliance report submitted to the Pubs
Code Adjudicator (PCA) for the reporting
period 1 April 2023 – 31 March 2024 (PCA
Period). During the PCA period, Marston’s
received four valid market rent-only requests
from tied tenants, of which one was
referredto the Pubs Code Adjudicator
forarbitration. It is not subject to any
investigations, enforcements or
representations of unfair business practices
by the PCA. The PCA compliance report
and supporting information is available
onour website: www.marstonspubs.co.uk.
GovernanceStrategic report Financial statements Additional information
60 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
AUDIT COMMITTEE REPORT
DEAR SHAREHOLDER,
I am pleased to present our report for the
period ended 28 September 2024 which sets
out how the Directors’ Remuneration Policy
has been applied during the period and
how we intend to operate the Remuneration
Policy in FY2025.
Overview of performance in FY2024
and business context
FY2024 has been a significant year for
Marston’s. Under the leadership of Justin
Platt, the business disposed of its remaining
interest in CMBC enabling the start of a new
chapter as a pure-play pub operator and
achieving our target of reducing debt to
below £1 billion ahead of schedule.
We hosted a Capital Markets Day (CMD)
inOctober 2024, outlining our refreshed
strategy to deliver sustainable, long-term
growth, together with a revised capital
allocation framework focused on organic
growth, further debt reduction and
deleveraging, the future reinstatement
ofdividends and targeted M&A.
Marston’s financial performance in FY2024
was strong, delivering like-for-like sales
growth of 4.8%, driven by higher guest
satisfaction and improved consistency
across our pubs. This was reflected in our
guest Reputation score which increased
to800 at the end of the year (2023: 766).
Total revenue for the reporting year
increased by 3% to £898.6 million (2023:
£872.3 million), with underlying EBITDA from
continuing operations increasing by 13%
to£192.5 million (2023: £170.3 million).
Underlying operating margin grew by over
200 basis points compared toFY2023,
to16.4% (2023: 14.3%). In addition, team
engagement and pub standards metrics
continue to improve.
As we set out at our CMD, our capital
allocation framework is focused on
delivering sustainable long-term value for
shareholders. Going forward, the Board
intends to balance debt reduction and
strategic growth investments with the goal
ofcreating a more financially robust
business that can ultimately support
shareholder returns. Further details are set
out in the Strategic report, on page 8.
Dividends form a core part of our capital
allocation framework and, whilst no
dividend will be paid in respect of FY2024,
the Board is cognisant of the importance
ofdividends to our shareholders.
Performance outcomes for the year
Annual bonus FY2024
The performance measures for the FY2024
annual bonus were based on a balanced
mix of financial (Group sales, EBITDA and
recurring FCF) and strategic measures
(Reputation score and employee
engagement), and stretching targets were
set at the start of the year.
As summarised above, the business
achieved growth in all measures, with a
balance of above threshold and maximum
performance outturn. The excellent
Reputation score of 800 and employee
engagement score of 8.4, both achieving
maximum performance, reflect the
continuing efforts of our People to
consistently deliver great guest experiences.
Group sales increased, demonstrating the
appeal of our predominantly community-
based estate. Our expertise in managing
local pubs, together with our strategic
commitment to delivering exceptional
guest experiences and enhancing our
Reputation score, has supported this
growth. This resulted in performance
achieving above threshold against the
target set early on in the year. Underlying
EBITDA also achieved above threshold
performance, reflecting positive revenue
growth and continued efforts to optimise
costs and enhance operational efficiency.
Recurring FCF of £43.6 million (2023: outflow
of £38.5 million) achieved maximum
performance.
When reviewing the formulaic outcome
ofthe bonus against the targets, the
Committee took into account other
stakeholder outcomes:
• Wider workforce experience – bonus
schemes for salaried employees are
aligned, therefore all eligible employees
will receive a consistent outturn of c.70%
of their achievable bonus for FY2024.
Ourpub team members have the
opportunity to earn monthly incentives,
based on drinks sales, and rewards
through a quarterly bonus scheme,
tailored to each individual pub. More
than 75% of our pub team members, as
at the end of the reporting year, had
received one or more payments via
these schemes.
• Investors – share price increased by more
than 40% during the reporting year.
• Wider business performance – each of
the key metrics has achieved growth on
the previous year’s outturn.
Having considered the formulaic bonus
outturn in the context of stakeholder
outcomes during the reporting year, the
Committee is comfortable that the bonus
payout of 70.19% of maximum for the
Executive Directors is appropriate and so
nodiscretion has been applied on the
formulaic outcome.
A full breakdown of the measures, targets
and our performance against them is set
out on page 68.
Financial statements Additional information
61Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
Directors’ Remuneration report
CORPORATE GOVERNANCE REPORT continued
In line with the Directors’ Remuneration
Policy, one-third of bonus earned (after tax)
by the Executive Directors will be deferred
into shares for a period of three years.
LTIP FY2022 vesting
The three-year performance period for
theLTIP award granted in December 2021
ended on 28 September 2024. Performance
was based 40% on underlying Profit before
Tax (PBT), 40% on Net Cash Flow (NCF) and
20% on Total Shareholder Return (TSR) versus
the companies in the FTSE 250 Index
(excluding Investment Trusts). The PBT and
TSR elements did not reach the threshold
performance requirement. However, the
NCF outturn achieved between target and
maximum performance, resulting in a
vesting of 73.3% of the NCF element and an
overall vesting of 29.32% of the total award.
The Committee discussed the formulaic
outturn of the LTIP, in particular the
contribution of non-core pub disposals to
the NCF result. Given that disposals formed
part of the agreed strategy in operation
during the three-year performance period,
andthat the CMBC disposal proceeds
wereexcluded from the outturn figure, the
Committee concluded that there was a
strong and clear link between reward and
performance and that discretion was not
required to adjust the incentive outcome.
Inaddition, shares received by the
Executives on vesting will be held for a
further two years before they can be sold,
subject to achieving the 200% of salary
shareholding guidance level.
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 during the year
William Rucker stepped down as Chair of
the Board with effect from 8 July 2024 and
was succeeded by Ken Lever. The Chair’s
fee was at £220,000. There will be no further
increase in the Chair fee for FY2025.
As disclosed last year, Andrew Andrea
stepped down from the Board on
17November 2023. He was available
tothebusiness in order to facilitate a
smoothhandover and transition until
31December 2023. Justin Platt was
appointed as Chief Executive Officer on
10January 2024. Further details of the
remuneration arrangements for Justin and
Andrew are set out on pages 72 and 81 of
the 2023 Annual Report and Accounts
andfurther details in relation to Andrew
arealso set out on page 71 of this report.
Implementation of the
Remuneration Policy FY2025
The Remuneration Policy is next due to be
approved by shareholders at our AGM in
2026. During FY2025, the Committee will
review the current policy to ensure that
thepolicy is fit for purpose for our refreshed
strategy as a pure-play pub operator. The
review will focus on appropriate structures
and performance measures for our variable
pay schemes to support our long-term
growth strategy and to be aligned to the
wider workforce and aligned to the interests
of shareholders andother stakeholders in
our business.
The Committee has considered how the
policy should be implemented for FY2025,
itsfinal year of operation. We have
considered market practice, investor
guidelines, pay across the business and the
views of management. The key decisions
taken for FY2025 included:
Base salary and Non-executive Director
fees effective 1 October 2024
During the year, the Committee reviewed
salary increases for the wider salaried
workforce taking into consideration external
benchmarking and the continued focus
oncontrolling our cost base. Following
thereview, the vast majority of the wider
salaried workforce received an increase
of3% of salary, with around 14% of that
population receiving exceptional pay
awards based on performance and
external benchmarking. 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 3% and 12.9%, with a total
aggregated increase of 6.9%. In the context
of these increases, the Committee was
satisfied with a 3% increase also being
applied to theExecutive Directors’ base
salaries.
Non-executive Directors’ fees have been
increased by 3% for FY2025. The Chair’s fees
were set upon appointment in July 2024
andtherefore the Committee agreed that
no increase should be made for FY2025.
Annual bonus for FY2025
The bonus opportunity for the Executive
Directors will remain unchanged for FY2025,
with the CEO eligible for an annual bonus
ofup to 125% of salary and the CFO up to
100% of salary. Performance measures have
been reviewed to align with our refreshed
growth strategy and, as part of the process,
the Committee reviewed the balance of
financial and non-financial measures and
the weighting of each individual
performance measure. As a result of the
review, the financial elements have
increased from 70% to 80% of the total
opportunity and the non-financials have
reduced from 30% to 20%. The Committee
determined that the weighting on EBITDA
should be increased from 30% to 40%.
Asthe weighting on non-financial measures
has been reduced, the Committee also
determined that there should be a single
non-financial measure. Therefore, the
weighting on the Reputation score was
increased from 15% to 20%. Whilst the
employee engagement measure has been
removed from the bonus, the Committee
will consider employee engagement when
reviewing the outcome under the bonus
against broader business performance in
FY2025. Employee engagement also forms
part of a balanced scorecard that is
monitored by the Executive Committee and
the Board. Therefore, the FY2025 bonus will
be based on Group revenue (20%), Group
EBITDA (40%), recurring free cash flow (20%)
and Reputation score (20%).
The targets are stretching and incentivising
with one third of any bonus paid deferred
into shares for three years.
GovernanceStrategic report Financial statements Additional information
62 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
DIRECTORS’ REMUNERATION REPORT
LTIP for FY2025
Both the CEO and CFO will receive an
LTIPaward in line with the grant received
inrespect of FY2024 (150% and 125% of
basesalary, respectively), and in line with
the current policy. During the year, the
Committee reviewed the performance
measures for the LTIP to ensure that they
continue to align with our long-term
strategy. With the sale of our stake in CMBC
significantly bolstering our balance sheet,
reducing net debt well below our £1 billion
target, ahead of schedule, the net cash
flow measure has been removed from the
LTIP. Mindful of the Company’s commitment
to the delivery of £50 million recurring free
cash flow in the near term, the Committee
are satisfied that this remains a key focus
given its inclusion as a measure in the
annual bonus scheme. Consequently, the
othermeasures have been rebalanced.
ForFY2025, the LTIP will be subject to
underlying PBT (40%), operating margin
(30%) and relative total shareholder return
(30%) performance measures.
Stretching targets have been agreed and
the threshold and maximum ranges are set
out on page 76.
Other considerations during
theyear
Executive Director pay and the wider
workforce
We continue 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 the continuing cost-of-living
challenges.
The Committee also retains oversight of
howbonus schemes are aligned throughout
the organisation, and of the performance
measures, targets and outturn of each
scheme. Bonus measures, and more
targeted monthly and quarterly incentives
for our pub team members, are aligned
toour vision and strategy for the entire
workforce.
Bridget Lea, our designated Non-executive
Director for Workforce Engagement, and a
member of this Committee, conducted an
employee engagement session during the
year. Executive remuneration was not raised
as a concern during the year. Therefore, no
amendments were required to be made to
the proposed implementation of the policy
in FY2025 as a result of this engagement.
Further details of engagement with our
People throughout the year can be found
on page 15.
Shareholder engagement
The Committee welcomes ongoing
shareholder engagement and takes an
active interest in voting outcomes. We are
pleased that the 2023 Annual Report on
Remuneration received very strong levels
ofsupport with over 95% of votes cast in
favour of the resolution at our 2024 AGM,
following over 93% support of the policy
atour 2023 AGM.
We continue to welcome and encourage
all feedback from our shareholders, as it
helps inform our thinking on remuneration
matters, and hope we can rely on your
continued support. During our policy review
in the coming year, we will engage with
ourmajor shareholders and the leading
shareholder advisory bodies, sharing details
of our policy proposals ahead of submitting
these for approval at our AGM in 2026.
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 our AGM (on 21 January 2025)
to answer your questions. Alternatively,
ifyou are not able to attend the AGM,
please do send your questions to the email
address above.
OCTAVIA MORLEY
CHAIR OF THE REMUNERATION
COMMITTEE
Financial statements Additional information
63Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
DIRECTORS’ REMUNERATION REPORT
Three scheduled Committee meetings
were held during the year, together with
an additional three meetings held in
relation to Board appointments and
tofinalise incentive scheme targets
forthe reporting year. Attendance by
Committee members (named above)
isset out on page 43. 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 (following his appointment in
January 2024) 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 continue to advise the
Committee, following their appointment
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 £17,338 during
the year in respect of advice given to the
Committee. Korn Ferry also provided Search
services during the year which were carried
out by a team separate to the remuneration
advisory team. The Committee is satisfied
that the advice it received during the year
was objective and independent. 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.
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, and 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.
• To consider 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.
Key activities of the Committee
inrespect of the year
• Determining the remuneration package
for the incoming CEO and the
contractual and remuneration
arrangements for the former CEO.
• Consideration of pay review proposals
for the Chair, senior management and
the wider workforce, and the fee for
the incoming Chair of the Board.
• FY2024 bonus and FY2022 LTIP award
outturns, as outlined on pages 61 to 63.
• Consideration of targets for
Operational, Group, senior
management and Executive Director
bonus schemes.
• 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 (at the 2023 AGM)
and the Directors’ remuneration report
atthe 2024 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 2024 AGM 61,485,390 95.16 3,127,124 4.84 64,612,514 103,541
Members
Octavia Morley (Chair)
Bridget Lea
Rachel Osborne – from 23 January 2024
Nick Varney
Matthew Roberts – until 23 January 2024
GovernanceStrategic report Financial statements Additional information
64 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
DIRECTORS’ REMUNERATION REPORT
Performance snapshot for FY2024
Annual bonus performance for FY2024
Measure
Weighting of
measure
Outturn
(as a % of
max)
Outcome
(% total
award)
Group sales 20% 37. 20 % 7. 4 4%
Group EBITDA 30% 42.5% 12.75%
Group recurring free cash flow 20% 100% 20%
Reputation score 15% 100% 15%
Employee engagement 15% 100% 15%
Bonus outturn 70.19%
Long-term incentive performance
December 2021 award
Measure
Weighting of
measure
Outturn
(as a % of
max)
Outcome
(% total
award)
Underlying PBT 40% 0% 0%
Net cash flow (cumulative) 40% 73.3% 29.32 %
Relative TSR vs FTSE 250 (excl. investment trusts) 20% 0% 0%
LTIP outturn 29. 32 %
Applying the policy in FY2025
Base salary • Justin Platt – £618,000 (3% increase)
• Hayleigh Lupino – £422,065 (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 revenue (20%), Group
EBITDA (40%), recurring free cash flow (20%) and Group
Reputation score (20%)
• One third of any bonus paid will be deferred into shares
to be held for three years
LTIP • Maximum opportunity:
– Justin Platt 150% of salary
– Hayleigh Lupino 125% of salary
• Performance measures: Underlying PBT (40%),
Operating margin (30%) and relative Total Shareholder
Return (30%)
• 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
Financial statements Additional information
65Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
REMUNERATION SUMMARY
A summary of the Directors’ Remuneration Policy, approved by shareholders at the 2024
AGM on 23 January 2024, 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).
Element
Purpose and link
to strategy Key features
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 salary.
• 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.
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.
GovernanceStrategic report Financial statements Additional information
66 Marston’s PLC Annual Report and Accounts 2024
Directors’ Remuneration Policy
CORPORATE GOVERNANCE REPORT continued
Element
Purpose and link
to strategy Key features
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.
Service contracts
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 28 September 2024
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.
Ken Lever 8 July 2024
Fixed term expiring on 7 July 2027 (subject to
renewal) and terminable on six months’ notice.
Octavia Morley 1 January 2020
Fixed term expiring on 31 December 2025
(subject to renewal) and terminable on one
month’s notice.
Rachel Osborne 23 January 2024
Fixed term expiring on 22 January 2027 (subject
to renewal) and terminable on one month’s
notice.
Nick Varney I July 2022
Fixed term expiring on 30 June 2025 (subject to
renewal) and terminable on one month’s notice.
Financial statements Additional information
67Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
DIRECTORS’ REMUNERATION POLICY
This part of the Directors’ Remuneration report sets out how we have implemented our
current Remuneration Policy during the period ended 28 September 2024. Sections in the
report not specifically stated as audited are not subject to audit.
Executive Directors
Total remuneration payable (audited)
Period ended
28 September
2024
Salary
£
Benefits
1
£
Pensions
2
£
Other
£
Total
fixed
£
Bonus
£
Long-term
incentives
3
£
Total
variable
£
Total
£
Hayleigh
Lupino 4 0 9,7 73 13,500 12,293 – 435,566 28 7, 619 80,862 368,481 804,047
Justin Platt
4
434,783 13,054 5,797 – 453,634 380,342 – 380,342 833,976
Andrew
Andrea
5
83,457 2,344 2,504 – 88,305 58,578 101,655 160,233 248,538
Period ended
30 September
2023
Salary
£
Benefits
£
Pension
£
Other
£
Total
fixed
£
Bonus
£
Long-term
incentives
£
Total
variable
£
Total
£
Andrew
Andrea 620,626 17, 4 8 0 18,619 0 656,725 0 0 0 656,725
Hayleigh
Lupino 3 9 7, 8 3 8 13,478 11,9 3 5 0 423,273 0 0 0 423,273
1. Private medical insurance benefits are unchanged, but premiums may vary from year to year. Benefits
include a car allowance, life assurance and group income protection for all Executive Directors. Justin Platt
and Andrew Andrea also received private medical insurance. Hayleigh Lupino opted out of this benefit.
2. Executive Directors receive a pension contribution of 3% of salary, in line with the wider workforce.
3. FY2022 LTIP awards relate to those granted in December 2021 and due to vest in December 2024 for
Hayleigh Lupino (in full) and Andrew Andrea (on a pro rata basis to 29 February 2024), based on
performance assessed over FY2022, FY2023 and FY2024. The value of the shares is based on a three-month
average share price of £0.383 to 28 September 2024. This value will be restated next year based on the
actual share price on the date of vesting.
4. Justin Platt was appointed as CEO with effect from 10 January 2024; salary, benefits, pension and bonus
areshown from this date.
5. Andrew Andrea stepped down as CEO and from the Board on 17 November 2023, followed by a handover
period until 31 December 2023. A subsequent period of garden leave ended on 29 February 2024. The
figures disclosed above relate to his time as a Director and the remainder of his remuneration is disclosed
onpage 71.
Annual bonus FY2024
Performance against the measures to 28 September 2024 is set out below. A summary of
the formulaic outturn and the Committee’s review and recommendations for the outturn
payment is provided in the Annual Statement, on page 61.
Performance metric Weighting
Threshold
(20% of
maximum)
Target (50%
of maximum)
Maximum
(100% of
maximum) Actual
%
of maximum
opportunity
Group sales 20% £890m £905m £930m £898.6m 7. 4 4 %
Group EBITDA 30% £188m £194m £198m £192.5m 12.75%
Group recurring
free cash flow 20% £17m £25m £31m £43.6m 20%
Reputation score 15% 766 775 785 800 15%
Employee
engagement 15% 7. 8 8.2 8.3 8.4 15%
Bonus outturn 70.19%
Bonus awarded 70.19%
Annual bonus outcome
% salary Value £
Deferral into
shares
1
Executive Director
Hayleigh Lupino
2
70.19% 2 87, 619 One third
Justin Platt
3
87. 74% 380,342 One third
Former Executive Director
Andrew Andrea
4
70.19% 112 ,172 One third
1. One third of any bonus paid (after tax) will be deferred into shares, which the Director must normally hold
fora period of three years.
2. Hayleigh Lupino was eligible for a maximum bonus opportunity of 100% of salary.
3. Justin Platt was eligible for a maximum bonus opportunity of 125% of salary, pro-rated for the period
ofhisemployment.
4. Andrew Andrea was eligible for a maximum bonus opportunity of 100% of salary, pro-rated for the period
ofhis active employment, to 31 December 2023. The total value of Andrew's bonus is £112,172. Of which,
£58,578 relates to the period where Andrew sat on the Board and is shown in the Total remuneration
payable table. The remaining £53,593 relates to the handover period between 18 November and
31December 2023 and is shown in the Payments for loss of office and to past Directors section on page 71.
GovernanceStrategic report Financial statements Additional information
68 Marston’s PLC Annual Report and Accounts 2024
Annual Report on Remuneration
CORPORATE GOVERNANCE REPORT continued
LTIP awards vesting in respect of performance during FY2024 (audited)
The FY2022 LTIP award was granted in December 2021 and the three-year performance
period ended on 28 September 2024. The performance targets for this award and
performance outturn are set out below:
Performance metric Weighting
Threshold
at 25%
On-target
50%
vesting
Maximum
100%
vesting Actual LTIP vesting
Underlying PBT 40% £63.65m £67.0m £68.67m £42.1m 0% out of 40%
Net cash flow
(cumulative) 40% £125m £150m £182m £164.9m
1
29.32% out
of 40%
TSR v FTSE250
(excluding Investment
Trusts) 20% Median –
Upper
quartile
Below
median 0% out of 20%
Total outcome
29.32% out of
100% maximum
1. Net cash flow excludes the cash proceeds from the CMBC disposal.
Further details of the Committee’s review of the outturn in relation to the NCF target is
provided in the Annual Statement on page 61. The December 2021 awards will therefore
vest in December 2024, with the shares subject to a two-year holding period.
Number
of shares
granted
Number
of shares
due to vest
Total
£
2
Executive Director
Hayleigh Lupino 720,078 211,12 6 80,862
Former Executive Director
Andrew Andrea
3
1,123,322 265,416 101,655
1. The share price was £0.6705 at the time of the award, compared to the three-month average share price of
£0.383 to 28 September 2024. Therefore, none of the value of the award is due to share price appreciation.
2. Value of shares based on a three-month average share price of £0.383 to 28 September 2024. This will be
restated next year based on the actual share price on the date of vesting.
3. The number of shares due to vest has been pro-rated to reflect the period of service during the
performance period for the award.
LTIP awards granted during FY2024 (audited)
Typically, LTIP awards are granted in December. However, the LTIP grants were delayed until
Justin Platt joined the business and awards were granted on 4 March 2024. During the
period between the normal grant date and the award date, the share price fellto £0.2925.
To recognise the drop in share price, the award granted to Hayleigh Lupino was determined
on a share price of £0.33. As a result, the number of options granted was 11% lower than
itwould have been if the share price on the date of grant (£0.2925) had been used. This
reduction was considered appropriate so that there would be no inadvertent benefit
caused by the delay to the grant.
As a new appointee to the Board, the Committee determined that Justin Platt’s LTIP award
should be granted on the normal basis. As a result, Justin’s award was granted using the
market price at the close of trading on the London Stock Exchange on 4 March 2024, being
£0.2925 per ordinary share.
Andrew Andrea was not eligible for an LTIP grant in FY2024.
Awards under the Plan comprise two elements: (i) a nil-cost option (a “Nil-Cost Option”);
and (ii) a CSOP Option over shares with a total value at the date of grant of £60,000
(thestatutory limit) with an exercise price of £0.2925 per share (a “CSOP Option”).
The options have been granted such that the maximum pre-tax value delivered to
participants will not exceed the value of the shares over which the Nil-Cost Option would
have vested if it was a standalone option. The CSOP option will be released only to the
extent that the aggregate CSOP gain is less than or equal to the value of the shares over
which the Nil-Cost Option would be released on the normal release date.
Financial statements Additional information
69Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
The details of the awards granted are as follows:
Nil-cost options CSOP options
Percentage
of salary
Number of
Nil-Cost
Options
granted
1
Face
value
at grant
3
Basis
of the
award
Number of
CSOP
options
granted
2
Face
value
at grant
3
% of award
vesting at
threshold
Hayleigh Lupino 125% 1,552,169 £512,216 £60,000 205,128 £60,000 25%
Justin Platt 150% 3,076,923 £900,000 £60,000 205,128 £60,000 25%
1. Justin Platt was granted 2,871,795 Nil-Cost Options on 4 March 2024 and Hayleigh Lupino was granted
1,347,041. This award was granted over fewer shares than intended, due to an administrative error.
Asaresult, the Executive Directors received a second grant on 28 March 2024. Justin was awarded
205,128Nil-Cost Options and Hayleigh was also granted 205,128 Nil-Cost Options. In both cases, the grant
leveldid not exceed the relevant applicable percentage of salary.
2. CSOP option with an exercise price of £0.2925 per share.
3. The face value of the CSOP awards and Justin’s Nil-Cost Option award is calculated using the mid-market
share price at date of grant of £0.2925. The face value of Hayleigh’s Nil-Cost Option is based on a share
price of £0.33.
4. The performance period for this award comprises the FY2024-FY2026 financial periods. The holding period
for this award comprises the FY2027 and FY2028 financial periods.
The awards will vest subject to the satisfaction of performance metrics set out below:
Measure Weighting
Threshold
(25% vest)
Maximum
(100% vest)
Underlying PBT (in FY2026) 20% £75m £95m
Net cash flow (cumulative over three years) 40% £150m £180m
Operating margin in FY2026 20% 16.3% 18.3%
Relative TSR v FTSE SmallCap
(excluding Investment Trusts) 20% Median
Upper
quartile
1. Straight-line vesting applies between threshold and maximum.
Non-executive Directors
Total remuneration (Chair and Non-executive Directors) (audited)
Base fee £
Committee
Chair £ SID £
FY2024 Total
£
FY2023 Total
£
Bridget Lea 58,880 – – 58,880 57,165
Octavia Morley 58,880 10,609 10,609 80,098 7 7, 76 5
Ken Lever
2
220,000 – – 51,014 –
Rachel Osborne
3
58,880 10,609 – 48,088 –
Nick Varney 58,880 – – 58,880 57,165
Past Directors
Matthew Roberts
4
58,880 10,609 – 21,652 67, 4 6 5
William Rucker
5
212,18 0 – – 168,660 206,000
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.
2. Ken Lever was appointed as Chair of the Board of Directors on 8 July 2024; the figures in the table above
reflect his remuneration from the date of appointment.
3. Rachel Osborne was appointed as a Non-executive Director, and Chair of the Audit Committee, on
23January 2024; the figures in the table above reflect her remuneration from the date of appointment.
4. Matthew Roberts stepped down from the Board on 23 January 2024.
5. William Rucker stepped down from the Board on 8 July 2024.
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
28 September
2024
As at
30 September
2023
Bridget Lea 86,703 86,703
Octavia Morley 25,000 25,000
Ken Lever 280,000 –
Rachel Osborne 141,067 –
Nick Varney 317,882 317, 8 8 2
Former Non-executive Directors
Matthew Roberts
1
25,000 25,000
William Rucker
2
400,000 400,000
1. Matthew Roberts stepped down from the Board on 23 January 2024. His interests in ordinary shares are
shown as at that date.
2. William Rucker stepped down from the Board on 8 July 2024. His interests in ordinary shares are shown
asatthat date.
GovernanceStrategic report Financial statements Additional information
70 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
Payments for loss of office and to past Directors (audited)
As reported in the 2023 Annual Report and Accounts, Andrew Andrea stepped down from
the Board with effect from 17 November 2023 and remained actively employed assisting
ina handover period until 31 December 2023. A short period of garden leave was
completed from 1 January until 29 February 2024. The following arrangements applied to
Andrew’s remuneration from the date he stepped down from the Board until the end of his
employment period. Details of the amounts received are set out on page 68.
• He continued to receive his full salary, pension and benefits until 29 February 2024.
Andrew was appointed as CFO of C&C Group plc on 1 March 2024. From this date to
16August 2024, Andrew did not receive any benefits or pension contributions from
Marston’s and monthly salary payments from Marston’s were reduced by an amount
equivalent to the salary for his new role. Payments from 18 November 2023 to 16 August
2024 amounted to £293,456 in relation to base salary, £5,487 in relation to pension and
£5,136 in relation to benefits.
• He was eligible to receive a bonus for FY2024 based on his period of active employment
to 31 December 2023. His bonus for that period equates to £112,172 of which £53,593
relates to the period following Andrew stepping down from the Board. Further details
onperformance are set out in the Annual Statement on page 61. One third of his bonus
forFY2024 (after tax) will be paid in shares and held for three years.
• Andrew was treated as a good leaver in respect of his unvested FY2022 and FY2023 LTIP
awards and these will continue subject to a pro-rata reduction to 29 February 2024, the
achievement of performance conditions and will vest at the normal time. The two-year
post-vesting holding period will continue to apply.
• Andrew will remain subject to post-employment shareholding guidelines.
No further payments were made to past Directors above the de minimis threshold.
Allpayments are in line with the remuneration policy. The Committee did not exercise
anydiscretion in relation to the payments to Andrew.
Total shareholder return chart and CEO remuneration history
The graph below shows the value, at 28 September 2024, of £100 invested in the Company
on 5 October 2014 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.
0
50
100
150
200
£
3 Oct
2014
30 Oct
2015
30 Sep
2016
29 Sep
2017
28 Sep
2018
27 Sep
2019
2 Oct
2020
1 Oct
2021
30 Sep
2022
Marston’s TSR
29 Sep
2023
27 Sep
2024
FTSE All Share TSR
Total remuneration of the CEO over the past 10 financial periods is shown below. The
annual bonus payout and LTIP vesting level as a percentage of the maximum opportunity
isalso shown.
Year Name
1
Total
remuneration £
Annual bonus (%
maximum)
LTIP vesting (% of
maximum)
FY2024 Justin Platt 833,976 70.19% N/A
FY2024 Andrew Andrea 248,538 70.19% 29.32 %
FY2023 Andrew Andrea 656,725 0% 0%
FY2022 Andrew Andrea 783,654 14% 40%
FY2021 Ralph Findlay 711,612 0% 0%
FY2020 Ralph Findlay 592,423 0% 0%
FY2019 Ralph Findlay 722,432 0% 0%
FY2018 Ralph Findlay 8 07, 6 65 17. 7 % 0%
FY2 017 Ralph Findlay 803,303 20% 0%
FY2016 Ralph Findlay 1,0 08,320 40% 21%
FY2015 Ralph Findlay 876,788 40% 0%
1. Justin Platt was appointed as CEO and a Director with effect from 10 January 2024. Andrew Andrea
stepped down as CEO and as a Director with effect from 17 November 2023, having been appointed as
CEO from 3 October 2021. Ralph Findlay stepped down from the Board and retired from the Group as CEO
on 2 October 2021.
Financial statements Additional information
71Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
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 five 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.
Current Directors Former Directors
Wider
workforce Justin Platt
2
Hayleigh Lupino Ken Lever
2
Bridget Lea Octavia Morley Rachel Osborne
2
Nick Varney Andrew Andrea
2
Matthew Roberts
2
William Rucker
2
Salary/ fees
1
FY2024 and FY2023 8.1% N/A 3% N/A 3% 3% N/A 3% N/A N/A N/A
FY2023 and FY2022 4.7% N/A 3% N/A 3% 3% N/A 3% 3% 3% 3%
FY2022 and FY2021 11.1% N/A N/A N/A 2.7% 8.7% N/A N/A 53% 6.5% 3%
FY2021 and FY2020 2.9% N/A N/A N/A 0% 0% N/A N/A 2% 0% 0%
FY2020 and FY2019 6.4% N/A N/A N/A N/A N/A N/A N/A 2% 0% 0%
Taxable benefits
3
FY2024 and FY2023 See note 3 N/A 0% _ _ _ _ _ N/A _ _
FY2023 and FY2022 See note 3 N/A 0% _ _ _ _ _ 0% _ _
FY2022 and FY2021 See note 3 N/A N/A _ _ _ _ _ 18.7% _ _
FY2021 and FY2020 See note 3 N/A N/A _ _ _ _ _ 5.8% _ _
FY2020 and FY2019 See note 3 N/A N/A _ _ _ _ _ (6.3%) _ _
Annual bonus
4
FY2024 and FY2023 See note 4 N/A 100% _ _ _ _ _ N/A _ _
FY2023 and FY2022 See note 4 N/A N/A _ _ _ _ _ (100%) _ _
FY2022 and FY2021 See note 4 N/A N/A _ _ _ _ _ 100% _ _
FY2021 and FY2020 See note 4 N/A N/A _ _ _ _ _ 0% _ _
FY2020 and FY2019 See note 4 N/A N/A _ _ _ _ _ 0% _ _
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.
2. Where the incumbent did not serve for the full year, the calculation has not been made as it is unrepresentative. Justin Platt was appointed CEO effective from 10 January 2024. Ken Lever was appointed as Chair of the Board
effective from 8 July 2024. Rachel Osborne was appointed Non-executive Director effective from 23 January 2024.
3. No changes to benefits 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.
4. No bonuses were payable in respect of FY2023, based on Group performance, (with the exception of operational bonuses and discretionary payments earned by a small number of employees), therefore acomparison with
bonuses earned in respect of FY2024 is not meaningful.
GovernanceStrategic report Financial statements Additional information
72 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
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
FY2024
1
Option B 56:1 52:1 49:1
FY2023 Option B 36:1 34:1 31:1
FY2022 Option B 4 6:1 45:1 4 0:1
FY2021 Option B 47:1 4 4:1 4 3:1
FY2020 (based on contractual salary
andbenefits) Option B 48:1 45:1 41:1
FY2020 (reflecting voluntary reduction
insalary and benefits) Option B 4 0:1 37:1 3 4:1
1. The CEO pay ratio has been calculated based on the aggregate pay of Justin Platt and Andrew Andrea.
2. Two sets of pay ratios are included in the table above for FY2020, 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 FY2020.
Component
CEO
£
25th percentile
£
50th percentile
£
75th percentile
£
Base salary 518,240 19,2 01 20,821 22,131
Total remuneration 1,082,514 19,201 20,821 22,131
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 2024 gender pay gap data is used to identify the employees
falling at the relevant percentile. Total remuneration is then calculated for FY2024. 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 FY2024 financial year. Theemployee percentiles were
determined by reference to 5 April 2024.
A substantial proportion of the CEO’s total remuneration is performance-related and
delivered in shares. This means that the ratios will vary significantly depending on the level
of the CEO’s annual bonus and long-term incentive outcomes, which are likely to fluctuate
year-on-year. Over time, the Company considers the median pay ratio is consistent with
theGroup’s wider policies on employee pay, reward and progression.
In FY2023, neither the annual bonus nor the LTIP was paid out for the CEO, leading to a
lower ratio compared to previous years. For FY2024, as required by reporting regulations,
the CEO pay ratio has been calculated using the combined remuneration for Justin and
Andrew. Consequently, the CEO pay ratio showed a year-on-year increase (which is likely
to be exceptional, reflecting the circumstances).
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.
FY2024 FY2023 % change
Dividend payments
1
£0m £0m –
Total employee pay
2
£208.8m £210.6m (0.85%)
1. No distributions by way of share buybacks were made to shareholders during FY2024 or FY2023.
2. Excluding non-underlying items.
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 28 September 2024, Justin Platt held shares worth 25% of base salary (share purchases
made voluntarily) (2023: N/A) and Hayleigh Lupino held 22% of base salary in shares
(2023:13% of base salary).
In assessing the extent to which the guidelines are satisfied, shares are valued at the end
ofthe relevant financial period. Once the required holding has been achieved, any
change in the share price is disregarded when assessing the value attributed to shares
already held.
Financial statements Additional information
73Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
Executive Directors' share Interests as at 28 September 2024
Shares owned outright
1
Share options
2
Not subject to performance Subject to performance
Executive Director At 28.09.24 At 30.09. 23 Unvested
Vested but
unexercised Unvested
Vested but
unexercised
Shareholding
requirement
(% of salary)
Actual %
of salary
holding
Hayleigh Lupino 198,517 168,3 88 40,909
3
17, 5 5 0 3,358,207 – 200% 22%
4
Justin Platt 3 4 7, 8 8 6 – – – 3,282,051 – 200% 25%
4
Former Executive Director
Andrew Andrea 454,032 454,032 – 148,849 3,159,498 – 200% 23%
5
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 share options are Sharesave options.
4. Shareholdings for Hayleigh and Justin are calculated based on the share price as at 27 September 2024 (£0.43 per share) which was the last trading day of the financial year.
5. The shareholding for Andrew Andrea is his shareholding on 17 November 2023, when he stepped down from the Board and is calculated using the share price on that date (£0.3265 per share).
Executive Directors Interests in share options as at 28 September 2024
Grant date
1
Brought
forward
30.09.23 Granted
Exercised/
vested
Cancelled/
lapsed
Carried
forward
28.09.24
Exercise
price £ Vesting date
Release
date
9
Hayleigh Lupino LTIP 2019
2
17, 5 5 0 – – – 17,550 Nil 2022 2024
May 2021
3
75,324 – – 75,324 0 Nil 2023 N/A
Dec 2021
4
675,336 – – – 720,078 Nil 2024 2026
4 4 ,742 – – 44,472 0
5
0.6507 Waived and so lapsed
2022
6
1,085,960 – – – 1,085,960 Nil 2025 2027
Mar 2024
7
– 1,552,169 – – 1,552,169 Nil 2026 2028
– 205,128 – – 205,128 0.2925 2026 2028
Sharesave June 2022 40,909 – – – 40,909 0.44 2025 N/A
Deferred bonus May 2021 3 0,129 – 30,129
8
– 0 Nil 2024 2024
Justin Platt LTIP Mar 2024
7
– 3,076,923 – – 3,076,923 Nil 2026 2028
– 205,128 – – 205,128 0.2925 2026 2028
Former Executive Director
GovernanceStrategic report Financial statements Additional information
74 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
Grant date
1
Brought
forward
30.09.23 Granted
Exercised/
vested
Cancelled/
lapsed
Carried
forward
28.09.24
Exercise
price £ Vesting date
Release
date
9
Andrew Andrea LTIP 2019
2
148,849 – – – 148,849 Nil 2022 2024
May 2021
3
510,295 – – 510,295 0 Nil 2023 N/A
Dec 2021
4
1,078,58 0 – – – 1,078,580 Nil 2024 2026
4 4 ,742 – – – 44,742 £0.6507 2024 2026
2022
6
2,0 36,176 – – – 2,036,176 Nil 2025 2027
Sharesave June 2022 40,909 – – 40,909 0 £0.44 2025 N/A
1. Awards granted annually in December, unless otherwise stated.
2. The performance conditions applying to the FY2020 LTIP are set out on page 67 of the 2020 Directors’ Remuneration Report.
3. The performance conditions applying to the FY2021 LTIP are set out on page 67 of the 2021 Directors’ Remuneration Report.
4. The performance conditions applying to the FY2022 LTIP are set out on page 67 of the 2021 Directors’ Remuneration Report.
5. During FY2024, Hayleigh waived her rights to the CSOP granted in December 2021 and so the LTIP award was increased by the number of CSOP awards that were waived as a consequence, as per the terms of the award,
inline with terms of the policy when the award was granted. This has the effect of reverting to a standard LTIP award without any tax benefit and so there is no economic benefit to Hayleigh of this change.
6. The performance conditions applying to the FY2023 LTIP are set out on page 94 of the 2022 Directors’ Remuneration Report.
7. The performance conditions applying to the FY2024 LTIP are set out on page 63 in this report.
8. The aggregate gain for Hayleigh Lupino in the year from the exercise of awards granted under the Deferred Bonus Plan was £11,780 based on the share price on the date of exercise of £0.391. Hayleigh retained all of the
resulting shares.
9. The exact release date will be confirmed when the date of the relevant preliminary results announcement is known and the associated closed period ends.
There have been no further changes to the Directors’ share interests and interests in share options between 28 September 2024 and 29 November 2024 (being the latest practical date
prior to the date of this report.
Financial statements Additional information
75Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
Implementation of the Policy in FY2025
The section below sets out the implementation of the Remuneration Policy in FY2025
whichhas been set in line with the Remuneration Policy approved by shareholders at the
2023 AGM. There is no significant change to the proposed implementation of the policy.
Base salary
As set out in the Chair’s Annual Statement on page 62, a 3% increase has been applied
tothe Executive Directors base salaries.
Base salary
FY2025
£
Base salary
FY2024
£
Hayleigh Lupino 422,066 4 0 9,773
Justin Platt 618,000 600,000
Annual bonus
Bonus opportunities for the CEO (up to 125% of salary) and CFO (up to 100% of salary) are
unchanged from the previous year.
As set out in the Chair’s Annual Statement, the bonus structure has evolved to drive the
newstrategy, with an 80:20 split between financial and non-financial metrics, all aligned
tothe key elements of our market-leading pub operating model.
Operating model element Performance measure % Weighting for 2024/25
Revenue growth Revenue 20%
Cost efficiency EBITDA 40%
Recurring free cash flow 20%
Guest satisfaction Reputation score 20%
The annual bonus targets for the FY2025 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
LTIP grant levels will remain unchanged, with the CEO receiving an LTIP grant of 150%
ofbase salary and the CFO an LTIP grant of 125% of base salary.
The extent to which the LTIP awards will vest will be determined by the performance
measures listed below:
Weighting Threshold 25% vesting Maximum 100% vesting
Underlying PBT in FY2027 40% £80m £100m
Operating margin 30% 17. 2 % 19. 0 %
Relative Total Shareholder Return vs
FTSE Small Cap (excl. investment trusts) 30% Median Upper quartile
The Committee is comfortable that these targets are aligned to strategy, provide an
appropriate level of stretch and represent a strong link between pay and performance.
Non-executive Director remuneration
A 3% increase will be applied to the base fee, and additional fees, for Non-executive
Directors (in line with the increase for the Executive Directors and that of the wider
workforce). The Chair’s fee is unchanged from the fee that applied upon appointment,
on8 July 2024. The fees that will apply from 1 October 2024 are set out below.
FY2025 FY2024
Chair’s fee £220,000 £218,545
1
Non-executive Director basic fee £60,646 £58,880
Additional fee for:
Chair of the Audit Committee £10,927 £10,609
Chair of the Remuneration Committee £10,927 £10,609
Senior Independent Director £10,927 £10,609
1. This fee applied to the former Chair of the Board, William Rucker, who stepped down on 8 July 2024.
Approval
This Remuneration report was approved by the Board of Directors on 3 December 2024
andsigned on its behalf by the Remuneration Committee Chair:
OCTAVIA MORLEY
CHAIR OF THE REMUNERATION COMMITTEE
3 December 2024
GovernanceStrategic report Financial statements Additional information
76 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
ANNUAL REPORT ON REMUNERATION
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 44, to the Statement of Directors’
responsibilities on page 80, constitutes the Directors’ report in accordance with the
Companies Act 2006.
Strategic report
The Company is required by the Companies Act 2006 to include a Strategic report in this
document. The information that fulfils the requirements of the Strategic report can be found
on pages 2 to 42, 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 43 and is
incorporated into this report by reference.
Dividends
As set out in the Strategic Report, the Board will balance debt reduction and strategic
growth investments with the goal of creating a more financially robust business, supporting
shareholder returns. Whilst no dividend will be paid in respect of FY2024, the Board is
cognisant of the importance of dividends to shareholders and this remains under review
asset out on page 13.
Directors
Biographies of the Directors currently serving on the Board are set out on pages 46 and 47.
Changes to the Board during the period are set out in the Corporate Governance report
on page 44. Details of Directors’ service contracts are set out in the Directors’ Remuneration
report on page 67. 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 21January 2025.
Directors’ shareholdings
The interests of Directors and their connected persons in the shares of the Company are
setout on pages 74 and 75 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 28 September 2024, 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 2024 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 2025 AGM. The powers of the Directors are further described in the
Corporate Governance Report on pages 44 to 80.
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 127. 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.
Details of employee share schemes are set out in note 27 to the financial statements on
page 127. 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.
Financial statements Additional information
77Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
Directors’ report
Significant shareholders
Notifications of the following voting interests in the Company’s ordinary share capital have
been received by the Company (in accordance with Chapter 5 of the DTR). 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.
As at 28 September 2024
Shareholder
No. Voting
rights
% Voting
rights
Aberforth Partners LLP 20,604,106 11. 01
HSBC Holdings plc 9,558,166 5.10
Momentum Global Investment Management Ltd 9,3 8 5,99 3 5.02
Dimensional Fund Advisors LLP 9,3 39,4 5 5 4.98
ClearBridge Investments Limited 9,307,805 4.98
The Capital Group Companies, Inc 9,291,379 4.96
Standard Life Aberdeen plc 9,2 28, 86 0 4.93
Brewin Dolphin 8,392,338 4.93
Bayberry Capital Partners LP 9,175,975 4.91
Sand Grove Capital Management 8,456,440 4.52
The Welcome Trust Limited 7,970,207 4.26
Royal London Asset Management Limited 6,794,023 3.99
Preference shares
The Company also discloses the following information as at 28 September 2024, obtained
from the Register of Members, for the preference shares:
Shareholder No. shares
% of issued
capital
Mrs Heather Mabel Medlock 10,407 13.88
George Mary Allison Limited 5,500 7. 33
Fiske Nominees Limited 31,548 42.06
Rulegale Nominees Limited 4,550 6.07
Mrs Helen Michels 2,750 3.67
Mr Richard Somerville 2,750 3.67
Mr Neil Aston and Mr Thomas Alexander Southall 2,855 3.81
Cgwl Nominees Limited 2,805 3.74
Mr Nathanael Peter Knowles 4,356 5.81
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.
Stakeholder engagement
Our Section 172(1) Statement can be found on page 14. Details of how the Directors
haveengaged with, and had regard to the interests of all our stakeholders and the need
tofoster the Company’s relationships with those stakeholders including the principal
decisionstaken by the Board during the financial year, are set out in the Strategic Report
on page 17.
Employee information
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 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. The average number of employees within the Group is shown in note 5
to the financial statements on page 106. More information can be found on page 15 and
inour Impact 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.
GovernanceStrategic report Financial statements Additional information
78 Marston’s PLC Annual Report and Accounts 2024
CORPORATE GOVERNANCE REPORT continued
DIRECTORS’ REPORT
Research and development
Our Director of Guest Insight & Pricing 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
More details of how we are reducing our environmental impact can be found on pages 33
to 34 in our Strategic report and our Impact 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 1 to the
financial statements on pages 100 and 101.
Events after balance sheet
The Group has not identified any post balance sheet events as at the date of this report.
Auditor
RSM UK Audit LLP have indicated their willingness to continue as Auditor and their
re-appointment has been approved by the Audit Committee. Resolutions to re-appoint
them and to authorise the Audit Committee to determine their remuneration will be
proposed at the 2025 AGM.
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 11 to 13. Further details are set out in the
financial statements on pages 88 to 140.
The conclusion of this assessment, having considered the Group’s forecast financial position
and exposure to principal risks and uncertainties, including cost and inflationary pressures,
and incorporating additional increases to employee related costs following the Autumn
Budget 2024, was that the Board through the Audit Committee, have a reasonable
expectation that the Group has adequate resources to continue to operate within its
borrowing facilities and covenants for a period of at least 12 months from the date
ofsigning the financial statements. Accordingly, the financial statements have been
prepared on the going concern basis. Full details are included in Note 1 of the financial
statements on page 95.
Disclosure of information to Auditor
In accordance with Section 418 of the Companies Act 2006, each Director who held office
at the date of the approval of this Directors’ Report confirms that, so far as they areaware,
there is no relevant audit information of which the Group’s auditor is unaware, andthat each
Director has taken all of the relevant steps that they ought to have taken asa Director to
ascertain any relevant audit information and ensure the auditor is aware ofsuch information.
Annual General Meeting (AGM)
The 2025 AGM will be held at The Farmhouse at Mackworth in Derby on Tuesday 21 January
2025. Shareholders are 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 from the above email address.
To enable all shareholders to vote on all resolutions in proportion to their shareholding,
thevoting at the 2025 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.
Further details, including how you can 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. 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 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
3 December 2024
Company registration number: 31461
Financial statements Additional information
79Marston’s PLC Annual Report and Accounts 2024
GovernanceStrategic report
CORPORATE GOVERNANCE REPORT continued
DIRECTORS’ REPORT
The Directors are responsible for preparing the Strategic Report and the Directors’ Report,
the Directors’ Remuneration Report, the separate Corporate Governance Statement and
the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements
for each financial year. The Directors have elected under company law, and are required
under the Listing Rules of the Financial Conduct Authority, to prepare group financial
statements in accordance with UK-adopted International Accounting Standards. The
Directors have elected under company law to prepare the company financial statements
in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law).
The Group financial statements are required by law and UK-adopted International
Accounting Standards to present fairly the financial position and performance of the
Group; the Companies Act 2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements giving a true and fair
vieware references to their achieving a fair presentation.
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 the
Company and of the profit or loss of the Group for that period.
In preparing each of the group and company financial statements, the Directors are
required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c. for the Group financial statements, state whether they have been prepared in
accordance with UK-adopted International Accounting Standards;
d. for the Company financial statements, state whether applicable UK accounting
standards have been followed, subject to any material departures disclosed and
explained in the company financial statements;
e. prepare the financial statements on the going concern basis unless it is inappropriate
to presume that the Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient
to show and explain the Group’s and the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Group and the Company
and enable them to ensure that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Directors’ statement pursuant to the Disclosure and Transparency Rules
Each of the Directors, whose names and functions are listed on pages 46 to 47 confirm that,
to the best of each person’s knowledge:
a. 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 of the company and the undertakings included in the consolidation
taken as a whole; and
b. the Strategic Report/Directors’ report contained in the Annual Report includes a fair
review of the development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.
The Directors are responsible for the maintenance and integrity of the corporate and
financial information included on the Marston’s PLC website.
Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors 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 and the Company’s position, performance, business model and strategy.
JUSTIN PLATT HAYLEIGH LUPINO
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
3 December 2024 3 December 2024
GovernanceStrategic report Financial statements Additional information
80 Marston’s PLC Annual Report and Accounts 2024
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
OPINION
We have audited the financial statements of Marston’s PLC (the ‘parent company’) and its
subsidiaries (the ‘group’) for the 52 week period ended 28 September 2024 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 notes to the financial
statements, including significant accounting policies. The financial reporting framework
that has been applied in the preparation of the group financial statements is applicable
law and UK-adopted International Accounting Standards. The financial reporting
framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards including
Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the
UKand Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
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 28 September 2024 and of the group’s loss for the
52week period then ended;
• the group financial statements have been properly prepared in accordance with
UK-adopted International Accounting Standards;
• the parent company financial statements have been properly prepared in
accordancewith United Kingdom Generally Accepted Accounting Practice; 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 under those standards are further described
in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed public interest entities and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Summary of our audit approach
Key audit matters Group
• Valuation of freehold and effective freehold land and buildings
• Accounting for the disposal of CMBC
• Going Concern
Parent Company
• No key audit matters noted
Materiality Group
• Overall materiality: £8,050,000
• Performance materiality: £5,635,000
Parent Company
• Overall materiality: £14,730,000
• Performance materiality: £10,300,000
Scope Our audit procedures covered 100% of revenue, 100% of total assets
and 100% of Loss for the period attributable to equity shareholders.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the group and parent company financial statements of the
current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, 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. These matters were addressed in the context of our audit
of the group and parent company financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Additional information
81Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF MARSTON’S PLC
Valuation of effective freehold land and buildings
Key audit matter
description
The effective freehold land and buildings within the group’s property estate,
are held under the valuation model with a carrying value of £1,661.7m at
the period end (2023: £1,645.1m) as disclosed in note 11 of the financial
statements.
Management have appointed an external expert to provide a formal
revaluation of the property estate.
The valuation estimation involves the determination of key inputs for each
property in the estate, being fair maintainable trade (FMT) and an
applicable market multiple.
Relatively small changes in these assumptions could have a significant
effect on the valuation and resulting strength of the group’s balance sheet.
Due to the potential for management bias in the determination of the
keyassumptions used to value the group’s estate, which could result in
apotential range of reasonable outcomes greater than our materiality for
the financial statements as a whole, we identified a significant risk in respect
of the valuation of the effective freehold land and buildings and, because
we considered this matter to be one of most significance in the audit we
therefore determined it to be a key audit matter.
How the matter
was addressed
inthe audit
Our main audit procedures included the following. We:
• Obtained an understanding of the group’s valuation approach, including
key assumptions, methodologies and data inputs, and assessed the
design and implementation of management’s review controls.
• Critically assessed the independence, professional qualifications,
competence and experience of both the external valuer engaged by
thegroup, and the key management personnel involved in the valuation
process.
• Designed a risk-based approach, in conjunction with an auditors property
expert, to identify a sample of properties within the valuation which
represented a heightened risk of material misstatement due to the
potential for management bias. The valuation of these properties was
challenged, and we obtained explanations and supporting
documentation from management to understand the rationale for these
valuations for both trading expectations which informed FMT and for
market multiples.
• Obtained the underlying trading data used to determine FMT and tested
the reliability of this for a sample of properties, vouching inputs to source
documentation and records.
• Instructed our auditor’s expert to:
– review the group’s approach and valuation policy;
– review our risk assessment process and property selection;
– perform an inspection and assessment of the valuation assumptions for
a sample of properties and perform a comparison to management’s
valuation estimates;
– benchmark market multiples ranges used; and
– consider significant changes in the market in the intervening period
from the valuation date.
• Obtained and assessed management’s year end assessment of whether
the property valuation and therefore carrying amount of effective
freehold land and buildings had materially changed between the
valuation date (30 June 2024) and year end (28 September 2024), which
included reviewing a sample of disposals and comparing the proceeds
against the carrying values
• Evaluated the appropriateness and accuracy of management’s
accounting entries in respect of the third-party valuations.
• Evaluated the completeness and accuracy of disclosures, including
disclosure of estimation uncertainty.
Key observations We did not identify any material issues within our testing. Overall we were
satisfied with the valuation of the property estate.
Accounting for the disposal of CMBC
Key audit matter
description
On 8 July 2024, the group announced the disposal of its 40% interest in its
associate, Carlsberg Marston’s Limited (referred to as CMBC) as disclosed
innote 12 of the financial statements.
The transaction took place on 31 July 2024, generating proceeds of £206m.
Immediately prior to the disposal, the investment in CMBC was held at
acarrying value of £222.5m.
The gap between the carrying value of the investment in CMBC at the
disposal date and the proceeds received, as well as the group’s share of
the CMBC impairment charges already recognised in the group’s interim
results for the period ended 30 March 2024, represented risks of further
impairment under IAS36 which resulted in management performing
adetailed impairment assessment at the date of disposal.
There is a risk of material misstatement to the group’s financial statements
from:
• The presentation and classification which distinguishes between the
impairment recognised under IAS36 and the loss on disposal recognised
to reflect the difference in carrying value of the investment in CMBC
immediately prior to the disposal and the net disposal proceeds received.
• The presentation and classification of the results from CMBC as
adiscontinued operation under IFRS5.
This matter was considered to be one of most significance in the audit
dueto both the judgement on the impairment but also due to the impact
the disposal has on the financial statements. We therefore identified the
accounting for the disposal of CMBC as a key audit matter with respect
tothe presentation and classification of the relevant transactions.
Financial statementsStrategic report Governance Additional information
82 Marston’s PLC Annual Report and Accounts 2024
INDEPENDENT AUDITOR’S REPORT continued
TO THE MEMBERS OF MARSTON’S PLC
How the matter
was addressed
inthe audit
Our audit work in relation to the disposal in CMBC included the following.
We:
• Directed and reviewed the audit work undertaken on the loss from the
associate, by the component auditor of CMBC;
• Obtained and reviewed management’s accounting papers and the sale
contract and checked the disposal proceeds to bank statements;
• Critically challenged management’s judgements and estimates in relation
to the proposed impairment at the point of divestment under IAS36; and
• Assessed management’s judgement in determining that CMBC was
amajor business line and as a result, disclosed the results of the associate
asa discontinued operation under IFRS 5.
We also considered whether the financial statement disclosures in relation
to the disposal and the discontinued operations were appropriate.
Key observations Based on the procedures performed we consider that the group’s
accounting for the disposal of its associate holding in CMBC, and the
related disclosures are appropriate.
Going concern
Key audit matter
description
There is significant debt held in the group which is subject to loan
covenants. The prior year financial statements disclosed a material
uncertainty in relation to going concern as management’s ‘severe but
plausible’ downside scenario illustrated a potential breach of the interest
cover covenant.
The group has refinanced certain borrowings in the year including
renegotiating its interest cover covenant to increase the headroom in the
going concern period.
The sector continues to face challenges and uncertainty due to evolving
consumer spending habits, impacts on costs from inflation and the recent
budget changes which impact employment costs.
This matter was considered to be one of the most significant in the audit
due to the inherent uncertainty in forecast information and the level of
headroom available on the interest cover covenant. We therefore identified
the groups going concern assessment as a key audit matter.
How the matter
was addressed
inthe audit
Our evaluation of the directors’ assessment of the group’s and parent
company’s ability to continue to adopt the going concern basis of
accounting included the following. We:
• Reviewed management’s approved board paper which set out the going
concern basis, key forecasting assumptions, sensitivities and conclusion;
• Obtained copies of management’s forecasts, downside sensitivity analysis
and reverse stress test for the Group and checked the mathematical
accuracy of the forecasts in arriving at cash and covenant headroom;
• Compared the historical forecasts to actual trading results to assess the
reliability of forecasting;
• Performed procedures on the key assumptions. This included comparing
forecasts to historical actuals for both the company and the sector,
current sector trends and forecast economic information, including
consensus on consumer spending;
• Recalculated the required deterioration in forecasts to trigger a breach
incovenants and assessed the likelihood of this happening taking into
account our assessment of the assumptions and available mitigating
actions;
• Checked the calculation of the availability of revised facilities and
available covenant headroom to the Group and parent company during
the going concern assessment period; and
• Reviewed any significant events subsequent to the balance sheet date
impacting liquidity and assessing the impact on available cash and
covenant headroom.
We then considered whether the financial statement disclosures in relation
to going concern were appropriate.
Key observations Based on the procedures performed we consider management’s decision
to prepare the group’s financial statements on a going concern basis
isappropriate.
Additional information
83Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
INDEPENDENT AUDITOR’S REPORT continued
TO THE MEMBERS OF MARSTON’S PLC
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to
determine the nature, timing and extent of our audit procedures. When evaluating whether
the effects of misstatements, both individually and on the financial statements as a whole,
could reasonably influence the economic decisions of the users we take into account the
qualitative nature and the size of the misstatements. Based on our professional judgement,
we determined materiality as follows:
Group Parent company
Overall materiality £8,050,000 £14,730,000
Basis for
determining
overall materiality
0.9% of Revenue 1% of total assets as a standalone
entity.
For the purposes of the group audit,
which excludes items which eliminate
on consolidation, the parent
company materiality is restricted
to£7,600,000.
Rationale for
benchmark
applied
Revenue is deemed to be primary
performance measure for the users
of the financial statements to
review the financial performance
of the Group.
Total assets is considered to be the
most appropriate benchmark for
theparent company.
Performance
materiality
£5,635,000 £10,300,000
Basis for
determining
performance
materiality
70% of overall materiality 70% of overall materiality
Reporting of
misstatements
tothe Audit
Committee
Misstatements in excess of £402,500
and misstatements below that
threshold that, in our view,
warranted reporting on qualitative
grounds.
Misstatements in excess of £402,500
and misstatements below that
threshold that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our audit
The group consists of 3 components, located in the United Kingdom and Guernsey.
The coverage achieved by our audit procedures was:
Number of
components Revenue Total assets
Loss for the period attributable
to equity shareholders
Full scope audit 2 100% 100% 100%
Total 2 100% 100% 100%
Limited scope procedures at group level were performed for the remaining component.
Of the above, full scope audits for 1 component was undertaken by component auditors.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the
going concern basis of accounting in the preparation of the financial statements
isappropriate.
For an explanation of how we evaluated management’s assessment of the group’s and
parent company’s ability to continue to adopt the going concern basis of accounting
andour key observations arising in respect to that evaluation, please see the going
concern key audit matter.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt
on the group’s or the parent company’s ability to continue as a going concern for a period
of at least twelve months from when the financial statements are authorised for issue.
In relation to the entity reporting on how they have applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in relation to the directors’
statement in the financial statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern
are described in the relevant sections of this report.
Financial statementsStrategic report Governance Additional information
84 Marston’s PLC Annual Report and Accounts 2024
INDEPENDENT AUDITOR’S REPORT continued
TO THE MEMBERS OF MARSTON’S PLC
Other information
The other information comprises the information included in the annual report other than
the financial statements and our auditor’s report thereon. The directors are responsible
forthe other information contained within the annual report. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial
period for which the financial statements are prepared is consistent with the financial
statements; and
• the Strategic Report and Directors’ Report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company
and their environment obtained in the course of the audit, we have not identified material
misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us 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.
Corporate governance statement
We have reviewed the directors’ statement in relation to going concern, longer-term
viability and that part of the Corporate Governance Statement relating to the parent
company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with
the financial statements and our knowledge obtained during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 79;
• Directors’ explanation as to their assessment of the group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 42;
• Director’s statement on whether it has a reasonable expectation that the group will
beable to continue in operation and meets its liabilities set out on page 42;
• Directors’ statement on fair, balanced and understandable set out on page 80;
• Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 36;
• Section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 35; and
• Section describing the work of the audit committee set out on page 58.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 80, the
directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the 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
the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Additional information
85Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
INDEPENDENT AUDITOR’S REPORT continued
TO THE MEMBERS OF MARSTON’S PLC
Auditor’s responsibilities for the audit of the financial statements
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
an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a 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 the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis
ofthese financial statements.
The extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of
our audit are to obtain sufficient appropriate audit evidence regarding compliance with
laws and regulations that have a direct effect on the determination of material amounts
and disclosures in the financial statements, to perform audit procedures to help identify
instances of non-compliance with other laws and regulations that may have a material
effect on the financial statements, and to respond appropriately to identified or suspected
non-compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material
misstatement of the financial statements due to fraud, to obtain sufficient appropriate
audit evidence regarding the assessed risks of material misstatement due to fraud through
designing and implementing appropriate responses and to respond appropriately to fraud
or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those
charged with governance, to ensure that the entity’s operations are conducted in
accordance with the provisions of laws and regulations and for the prevention and
detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities,
including fraud, the group audit engagement team and component auditors:
• obtained an understanding of the nature of the industry and sector, including the legal
and regulatory frameworks that the group and parent company operates in and how
the group and parent company are complying with the legal and regulatory frameworks;
• inquired of management, and those charged with governance, about their own
identification and assessment of the risks of irregularities, including any known actual,
suspected or alleged instances of fraud;
• discussed matters about non-compliance with laws and regulations and how fraud
might occur including assessment of how and where the financial statements may be
susceptible to fraud having obtained an understanding of the overall control environment.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud
that could have a material effect on the financial statements were communicated to
component auditors. Any instances of non-compliance with laws and regulations identified
and communicated by a component auditor were considered in our audit approach.
The most significant laws and regulations were determined as follows:
Legislation /
Regulation
Additional audit procedures performed by the Group audit
engagementteam and component auditors included:
IFRS / FRS 102 and
Companies Act
2006 / Listing
Rules
Review of the financial statement disclosures and testing to supporting
documentation.
Review of correspondence with regulators and action taken by the Group
as a result of this correspondence.
Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance
regulations
Input from a tax specialist in relation to current and deferred taxes on
property related matters, defined benefit pension and the disposal of
CMBC.
Consideration of whether any matter identified during the audit required
reporting to an appropriate authority outside the entity.
Food Safety /
Employment law /
Pubs code /
Health and Safety
regulations
ISAs limit the required audit procedures to identify non-compliance
withthese laws and regulations to inquiry of management and where
appropriate, those charged with governance (as noted above) and
inspection of legal and regulatory correspondence, if any. We have
completed these procedures which included discussions with the group’s
legal counsel.
The areas that we identified as being susceptible to material misstatement due to fraud
were:
Risk Audit procedures performed by the audit engagement team:
Revenue
recognition
A sample of transactions posted to nominal ledger codes outside of the
normal revenue cycle were identified using a data analytic tool and
investigated.
Management
override of
controls
Testing the appropriateness of a sample of journal entries and other
adjustments;
Assessing whether the judgements made in making accounting estimates
are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that
areunusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements
islocated on the Financial Reporting Council’s website at: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
Financial statementsStrategic report Governance Additional information
86 Marston’s PLC Annual Report and Accounts 2024
INDEPENDENT AUDITOR’S REPORT continued
TO THE MEMBERS OF MARSTON’S PLC
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the
boardof Directors on 31 January 2024 to audit the financial statements for the period
ending 28 September 2024 and subsequent financial periods.
The period of total uninterrupted consecutive appointments is one year, covering the
period ended 28 September 2024.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the
group or the parent company and we remain independent of the group and the parent
company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee in
accordance with ISAs (UK).
Use of our report
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.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and
Transparency Rules, these financial statements form part of the Annual Financial Report
prepared in Extensible Hypertext Markup Language (XHTML) format and filed on the
National Storage Mechanism of the UK FCA. This auditor’s report provides no assurance
over whether the annual financial report has been prepared in XHTML format.
IAN WALL
(Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
103 Colmore Row
Birmingham
B3 3AG
3 December 2024
Additional information
87Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
INDEPENDENT AUDITOR’S REPORT continued
TO THE MEMBERS OF MARSTON’S PLC
2023
2024(Restated)
Non- Non-
Underlying
1
underlying
1
Total
Underlying
1
underlying
1
Total
Note£m (note 4) £m £m £m (note 4) £m £m
Revenue
3
898 .6
–
898 .6
87 2. 3
–
872 .3
Net operating expenses
3
(75 1. 4)
4.5
(74 6 .9)
( 74 7. 5 )
(3 4 .6)
(7 8 2 .1)
Operating profit/(loss)
1 4 7. 2
4.5
15 1. 7
12 4 . 8
(3 4 .6)
9 0. 2
Finance costs
6
(1 0 6 . 5)
−
(10 6 . 5)
(1 0 0 . 4)
–
(10 0 . 4)
Finance income
6
1. 4
−
1. 4
1. 2
–
1. 2
Interest rate swap movements
4, 6
−
(32.2)
(32.2)
–
(21. 6)
(21. 6)
Net finance costs
4, 6
(1 0 5 .1)
(32.2)
(1 3 7. 3)
(9 9. 2)
(21. 6)
(12 0 . 8)
Profit/(loss) before taxation
4 2 .1
(2 7. 7)
14 . 4
2 5.6
(56.2)
(3 0. 6)
Taxation
4, 7
(9. 0)
12 .1
3 .1
(3 . 5)
14 . 9
11 . 4
Profit/(loss) for the period from continuing operations
3 3 .1
(15 . 6)
17. 5
2 2 .1
(41. 3)
(1 9. 2)
Discontinued operations
Profit/(loss) for the period from discontinued operations
4, 8
0.5
(3 6 . 5)
(3 6 .0)
9. 9
–
9. 9
Profit/(loss) for the period attributable to equity shareholders
33.6
(5 2 .1)
(1 8.5)
32 .0
(41. 3)
(9. 3)
The results for the current period reflect the 52 weeks ended 28 September 2024 and the results for the prior period reflect the 52 weeks ended 30 September 2023.
Following the disposal of the Group’s 40% investment in Carlsberg Marston’s Limited, the comparative information for the 52 weeks ended 30 September 2023 has been restated to show
discontinued operations separately from continuing operations.
2023
2024 (Restated)
Earnings/(loss) per share:
Note
p p
Basic (loss)/earnings per share
9
Total
(2 .9)
(1. 5)
Continuing
2.8
(3. 0)
Discontinued
(5 .7)
1. 6
Basic underlying
1
earnings per share
9
Total
5.3
5 .1
Continuing
5. 2
3. 5
Discontinued
0 .1
1. 6
Diluted (loss)/earnings per share
9
Total
(2 . 8)
(1. 5)
Continuing
2 .7
(3. 0)
Discontinued
(5. 5)
1. 6
Diluted underlying
1
earnings per share
9
Total
5 .1
5 .1
Continuing
5.0
3.5
Discontinued
0 .1
1. 6
1. Alternative performance measures (APMs) are defined and reconciled to a statutory equivalent in the Additional Information on page 141.
Financial statementsStrategic report Governance Additional information
88 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
GROUP INCOME STATEMENT
20242023
£m £m
Loss for the period
(18.5)
(9. 3)
Items of other comprehensive income that may subsequently be reclassified to profit or loss
Losses arising on cash flow hedges
(2 . 8)
(3 .0)
Transfers to the income statement on cash flow hedges
7. 6
11 . 4
Other comprehensive (expense)/income of associates relating to discontinued operations
(0 .1)
0. 8
Tax on items that may subsequently be reclassified to profit or loss
(1. 2)
(2 .1)
3.5
7. 1
Items of other comprehensive income that will not be reclassified to profit or loss
Remeasurement of retirement benefits
(6 .9)
(9. 2)
Unrealised surplus on revaluation of properties
80. 8
95 . 6
Reversal of past revaluation surplus
(3 9. 8)
(9 3 .9)
Tax on items that will not be reclassified to profit or loss
(8 .1)
(0 .2)
26.0
(7. 7 )
Other comprehensive income/(expense) for the period
2 9. 5
(0. 6)
Total comprehensive income/(expense) for the period attributable to equity shareholders
11. 0
(9. 9)
The results for the current period reflect the 52 weeks ended 28 September 2024 and the results for the prior period reflect the 52 weeks ended 30 September 2023.
Additional information
89Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
GROUP STATEMENT OF COMPREHENSIVE INCOME
2023
2024 (restated)
Note£m £m
Operating activities
Loss for the period
(18.5)
(9. 3)
Taxation
(3 .1)
(11 . 4)
Net finance costs
1 3 7. 3
12 0 . 8
Depreciation and amortisation
45.3
4 5. 5
Working capital movement
31
8.2
(2 9. 0)
Non-cash movements
31
32 .7
12 . 3
Decrease in provisions and other non-current liabilities
(0 .9)
(0. 8)
Difference between defined benefit pension contributions paid and amounts charged
(7. 5)
( 7. 6)
Dividends from associates
13 . 8
2 1. 6
Income tax received/(paid)
0 .1
(0 .9)
Net cash inflow from operating activities
2 0 7. 4
141. 2
Investing activities
Interest received
1. 7
1. 8
Sale of property, plant and equipment and assets held for sale
4 6.9
51. 3
Purchase of property, plant and equipment and intangible assets
(4 6 . 2)
(6 5 . 3)
Disposal of associate
205.5
–
Finance lease capital repayments received
2.0
2 .5
Net transfer from/(to) other cash deposits
30
2.0
(0 .1)
Net cash inflow/(outflow) from investing activities
2 11 . 9
(9. 8)
Financing activities
Interest paid
(101.9)
(9 3 .1)
Arrangement costs of bank facilities
(3 . 6)
(4 . 0)
Swap termination costs
(2 . 0)
–
Repayment of securitised debt
(41. 5)
(3 9. 4)
Repayment of bank borrowings
(4 19. 0)
(151. 0)
Advance of bank borrowings
225.0
16 5 . 0
Net repayments of capital element of lease liabilities
(8 .4)
(5 . 1)
Repayment of other borrowings
(5 0 . 0)
(5 . 0)
Net cash outflow from financing activities
(4 0 1. 4)
(13 2 . 6)
Net increase/(decrease) in cash and cash equivalents
30
17. 9
(1. 2)
The cash flows for the current period reflect the 52 weeks ended 28 September 2024 and the cash flows for the prior period reflect the 52 weeks ended 30 September 2023.
Followingthepublication of the FRC Thematic Review on ‘Offsetting in the financial statements’ in September 2024, the Group has reassessed the classification of cash flows arising
fromits bank borrowing facilities as presented in the cash flow statement and has concluded that advance/(repayment) of bank borrowings should be reported on a gross basis, where
the maturity periods were greater than three months. Prior year information has been restated on an equivalent basis. The net repayment of bank borrowings in the current period was
£( 1 9 4.0) million (2023: advance of £14.0 million). The presentational adjustment does not have any impact on net increase/(decrease) in cash and cash equivalents, the balance sheet,
the Group’s profit, or earnings per share in any of the periods presented.
Financial statementsStrategic report Governance Additional information
90 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
GROUP CASH FLOW STATEMENT
28 September30 September
2024 2023
Note£m £m
Non-current assets
Intangible assets
10
2 9. 3
3 2.9
Property, plant, and equipment
11
2 , 0 6 9. 0
2,0 6 4. 8
Interests in associates
12
−
25 0.9
Other non-current assets
13
14 . 4
15 . 0
Deferred tax assets
14
−
0.9
Retirement benefit surplus
15
13 .1
12 . 9
Derivative financial instruments
16
0.4
2. 7
2 ,1 2 6 . 2
2,380.1
Current assets
Derivative financial instruments
16
−
1.1
Inventories
17
14 . 4
14 . 9
Trade and other receivables
18
2 5 .9
26 .9
Current tax assets
−
0 .4
Other cash deposits
1.1
3 .1
Cash and cash equivalents
44.4
2 6. 5
85.8
72 .9
Assets held for sale
19
1.3
1. 4
8 7. 1
74 . 3
Current liabilities
Borrowings
20
(5 8 . 2)
(6 5 . 9)
Trade and other payables
22
(17 9. 5)
(17 0 . 4)
Current tax liabilities
(2 . 8)
–
Provisions for other liabilities and charges
23
(0 . 6)
(1. 4)
(2 4 1.1)
(2 37 . 7)
Non-current liabilities
Borrowings
20
(1, 2 4 4 . 7)
(1, 5 2 9. 5)
Derivative financial instruments
16
(5 9. 4)
(3 7. 4)
Other non-current liabilities
24
(8 . 3)
( 7. 1)
Provisions for other liabilities and charges
23
(2 . 6)
(2 . 6)
Deferred tax liabilities
14
(2 . 4)
–
(1 , 3 1 7. 4)
(1 ,57 6.6)
Net assets
654.8
6 4 0 .1
Additional information
91Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
As at 28 September 2024
GROUP BALANCE SHEET
28 September30 September
2024 2023
Note£m £m
Shareholders’ equity
Equity share capital
28
48 .7
4 8. 7
Share premium account
334.0
3 3 4. 0
Revaluation reserve
4 31. 6
412 .1
Capital redemption reserve
29
6. 8
6.8
Hedging reserve
(4 0 . 8)
(4 4 . 4)
Own shares
29
(11 0 . 2)
(11 0 . 6)
Retained earnings
(15 . 3)
(6 . 5)
Total equity
654.8
6 4 0 .1
The financial statements were approved by the Board and authorised for issue on 3 December 2024 and are signed on its behalf by:
JUSTIN PLATT HAYLEIGH LUPINO
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
3 December 2024 3 December 2024
Financial statementsStrategic report Governance Additional information
92 Marston’s PLC Annual Report and Accounts 2024
As at 28 September 2024
GROUP BALANCE SHEET continued
Share Capital
Equity share premium Revaluation redemptionHedgingOwnRetainedTotal
capitalaccountreservereserve reservesharesearningsequity
£m£m£m£m£m£m£m£m
At 1 October 2023
4 8. 7
33 4 .0
412 .1
6 .8
(4 4 .4)
(11 0 . 6)
(6 . 5)
6 4 0 .1
Loss for the period
−
−
−
−
−
−
(18 . 5)
(1 8 . 5)
Remeasurement of retirement benefits
−
−
−
−
−
−
(6 .9)
(6. 9)
Tax on remeasurement of retirement benefits
−
−
−
−
−
−
1. 7
1. 7
Losses on cash flow hedges
−
−
−
−
(2 . 8)
−
−
(2 . 8)
Transfers to the income statement on cash flow hedges
−
−
−
−
7. 6
−
−
7. 6
Tax on hedging reserve movements
−
−
−
−
(1. 2)
−
−
(1. 2)
Other comprehensive expense of associates
−
−
−
−
−
−
(0 . 1)
(0 . 1)
Property revaluation
−
−
80.8
−
−
−
−
80. 8
Property impairment
−
−
(3 9. 8)
−
−
−
−
(3 9. 8)
Deferred tax on properties
−
−
(9. 8)
−
−
−
−
(9. 8)
Total comprehensive income/(expense)
−
−
31. 2
−
3.6
−
(23 . 8)
11 . 0
Share-based payments
−
−
−
−
−
−
2.0
2.0
Tax on share-based payments
−
−
−
−
−
−
0 .1
0 .1
Sale of own shares
−
−
−
−
−
0.4
(0. 4)
−
Transfer disposals to retained earnings
−
−
(13 . 8)
−
−
−
13 . 8
−
Transfer tax to retained earnings
−
−
2 .1
−
−
−
(2 .1)
−
Changes in equity of associates
−
−
−
−
−
−
1. 6
1. 6
Total transactions with owners
−
−
(11 . 7 )
−
−
0.4
15 . 0
3.7
At 28 September 2024
48 .7
334.0
4 3 1.6
6.8
(4 0 . 8)
(11 0 . 2)
(15 . 3)
654.8
Additional information
93Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
GROUP STATEMENT OF CHANGES IN EQUITY
Share Capital
Equity share premium Revaluation redemption Hedging Own Retained Total
capital account reserve reserve reserve shares earnings equity
£m £m £m £m £m £m £m £m
At 2 October 2022
4 8. 7
33 4 .0
4 1 7. 1
6. 8
(50.7)
(11 0 . 9)
3 .1
6 4 8 .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)
–
–
–
–
(9 3 .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
4 8. 7
33 4.0
4 12 .1
6 .8
(4 4 . 4)
(11 0 . 6)
(6 . 5)
6 4 0 .1
Further detail in respect of the Group’s equity is provided in notes 28 and 29.
Financial statementsStrategic report Governance Additional information
94 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 30 September 2023
GROUP STATEMENT OF CHANGES IN EQUITY continued
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 28 September 2024
(2023: 52 weeks ended 30 September 2023) have been prepared in accordance with
UK-adopted International Accounting Standards in conformity 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 17
Insurance Contracts
New accounting standard
IAS 1
Presentation of Financial Statements
Amendments regarding the disclosure of accounting policies
IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
Amendments regarding the definition of accounting estimates
IAS 12
Income Taxes
Amendments regarding deferred tax related to assets and liabilities arising from
a single transaction
The Group previously accounted for deferred tax on lease liabilities under the net approach.
As a result of the adoption of the amendments to IAS 12, the comparative information
for the 52 weeks ended 30 September 2023 has been restated to reflect the separation
of the opening deferred tax liability of £63.6 million and opening deferred tax asset of
£76.2 million, and closing deferred tax liability of £61.3 million and closing deferred tax asset
of £74.6 million, in relation to the accounting for deferred tax on right-of-use assets and the
associated lease liabilities. There was no material impact on the opening position of the
comparative information, and therefore no third balance sheet has been presented, as the
offsetting criteria of IAS 12 has been met, allowing for the deferred tax asset and deferred
tax liability to be presented net within the Group’s balance sheet.
There are no other material impacts of these new or revised standards on the consolidated
financial statements for the 52 weeks ended 28 September 2024.
The International Accounting Standards Board (IASB) has 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
has also issued a number of minor amendments to standards as part of their Annual
Improvements to IFRS.
IFRS 7
Financial Instruments: Disclosures
Supplier finance arrangements 1 January 2024
Amendments to the classification and measurement 1 January 2026
of financial instruments
IFRS 9
Financial Instruments
1 January 2026
Amendments to the classification and measurement
of financial instruments
IFRS 10
Consolidated Financial Statements
Date deferred
Amendments regarding the sale or contribution of assets
between an investor and its associate or joint venture
IFRS 16
Leases
1 January 2024
Amendments regarding seller-lessee subsequent measurement
in a sale and leaseback transaction
IFRS 18
Presentation and Disclosure in Financial Statements
1 January 2027
New accounting standard
IFRS 19
Subsidiaries without Public Accountability
1 January 2027
New accounting standard
IAS 1
Presentation of Financial Statements
Amendments regarding the classification of liabilities 1 January 2024
Amendments regarding the classification of debt with covenants 1 January 2024
IAS 7
Statement of Cash Flows
1 January 2024
Supplier finance arrangements
IAS 21
The Effects of Changes in Foreign Exchange Rates
1 January 2025
Lack of Exchangeability
IAS 28
Investments in Associates and Joint Ventures
Date deferred
Amendments regarding the sale or contribution of assets
between an investor and its associate or joint venture
The Group is currently assessing the impact of the revised presentation and disclosure
requirements for financial statements from IFRS 18. It is not anticipated that any of the other
above unadopted new standards will have a material impact on the Group’s results or
financial position.
Additional information
95Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES
1 ACCOUNTING POLICIES CONTINUED
Going concern
The Group’s sources of funding include its securitised debt, a £200.0 million bank facility
available until July 2026 (of which £35.0 million was drawn at 28 September 2024), 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 August each year, which is expected to reduce to £10.0 million
in the near future (of which £nil was drawn at 28 September 2024).
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 a four-quarter period, and
the Net Worth is derived from the net assets of that group of companies.
There are two covenants associated with the Group’s bank facility for the non-securitised
group of companies – Debt Cover and Interest Cover. The Debt Cover covenant is a
measure of net borrowings to EBITDA which is a maximum of 3.0 times. The Interest Cover
covenant is a measure of EBITDA to finance charges, which is a minimum of 1.5 times from
28 September 2024, rising on a stepped basis to 1.75 times from 28 June 2025 and 2.0 times
from 28 March 2026.
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 uncertain
economic and political outlook, with ongoing geopolitical conflicts and uncertainties and
inflationary pressures that have also been impacted by the Autumn Budget 2024 measures,
notably employment cost increases.
The Group’s base case forecast assumes moderate sales price increases, operational
costs (that have not already been secured) rising broadly in line with inflation together with
continuing progress on the margin expansion programme and incorporating additional
increases to employee-related costs following the Autumn Budget 2024, including National
Minimum and Living Wage and Employers’ National Insurance. 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.
Due to the uncertain economic and political outlook and risk of further inflationary
pressures, the Directors have considered a downside scenario which models a small
decrease in sales compared to the prior year and additional costs beyond those forecast
in the base case in addition to the incremental costs already incorporated as a result of
the Autumn Budget 2024, excluding any potential mitigating management actions other
than the reduction of discretionary employee reward payments. On the Group’s downside
scenario, 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 reverse stress test, which analyses to what extent sales
would need to decrease in order to breach financial covenants. This reverse stress test has
determined that the Group could withstand a reduction in sales of over 10% from those
assessed in the base case throughout the going concern period, excluding any mitigating
actions other than the removal of discretionary employee reward payments, before
headroom on the Interest Cover covenant only becomes tight in the final quarter of the
going concern period and would be breached in the first quarter test after the going
concern period ends.
The Directors consider this scenario to be remote as, other than when the business was
closed during the pandemic, the Group has never experienced sales declines to this level.
Additionally, the Group could take management actions within the Directors’ control to
partially mitigate the financial impact.
Accordingly, the financial statements have been prepared on the going concern basis.
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.
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.
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.
Financial statementsStrategic report Governance Additional information
96 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
The rights provided to the Group through the securitisation give 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 these companies are
controlled by the Group, as defined in IFRS 10, and hence for the purpose of the
consolidated financial statements they have been treated as subsidiary 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. During the current period,
the Group sold the whole of its 40% interest in Carlsberg Marston’s Limited to a subsidiary
of Carlsberg A/S.
Revenue and other operating income
The Group’s revenue from contracts with customers comprises outlet sales, wholesale
sales and rental income.
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 its 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 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.
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 for the total of continuing and discontinued operations.
Non-underlying
1
items
In order to illustrate the underlying
1
performance of the Group, presentation has been
made of performance measures excluding those items which it is considered would distort
the comparability of the Group’s results. Non-underlying
1
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
1
is higher than
other items.
Details in respect of non-underlying
1
items recognised in the current and prior period are
provided in note 4. Material judgements in respect of the classification of non-underlying
1
items in the current period related to the impairment of freehold and leasehold properties,
reorganisation, restructuring and relocation costs, duplication costs, non-underlying
1
loss
from associates, impairment and loss on disposal of associates and the interest rate swap
movements. These items were considered to be non-underlying
1
as they were significant
items that resulted primarily from movements in external market variables or considerable
one-off factors rather than reflecting the underlying
1
trading performance of the Group.
Additional information
97Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
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 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 15 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
for determined multiples and unobservable market data for fair maintainable trade.
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 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 which case the reversal is recorded in the income statement.
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 sale.
Impairment
If there are indications of impairment or reversal of impairment, an assessment is made
of the recoverable amount of each significant cash generating unit; these are considered
to be the 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 the income statement.
Financial statementsStrategic report Governance Additional information
98 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
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 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 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.
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 condition is met when the sale is highly probable, the asset is available for immediate
sale in its present condition and it 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.
Additional information
99Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
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 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 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.
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 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 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 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 recognition, in which case the lifetime expected credit loss 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.
Financial statementsStrategic report Governance Additional information
100 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
The carrying amount of finance lease receivables, trade receivables and other
receivables is 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 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 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 statement.
Other cash deposits
Cash held on deposit with banks with a maturity of more than three months at the date
of 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.
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
comprehensive income. The return on plan assets, excluding amounts included in the 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. 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.
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.
Additional information
101Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
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 of the transaction. Monetary receivables and payables are remeasured at closing
day 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.
Discontinued operations
A discontinued operation is a component of the Group’s business that represents a
separate major line of business or geographical area of operations that has been disposed
of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification
as a discontinued operation occurs upon disposal or when the operation meets the criteria
to be classified as held for sale, if earlier. When an operation is classified as a discontinued
operation, the results are presented separately in the consolidated financial statements
and the comparative income statement is restated as if the operation had been discontinued
from the start of the comparative period.
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.
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:
Financial statementsStrategic report Governance Additional information
102 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
Non-underlying
1
items
• Determination of items to be classified as non-underlying
1
(note 4).
Discontinued operations
• Determination of income from associates representing a separate major line
of business resulting in the classification as discontinued operations (note 8).
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).
Interests in associates
• Recoverable amount of the investment in Carlsberg Marston’s Limited immediately
prior to its disposal (note 12).
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).
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 for the total of continuing and discontinued operations.
Geographical areas
All of the Group’s revenue is generated in the UK. All of the Group’s material assets are
located in the UK.
3 REVENUE AND NET OPERATING EXPENSES
2024 2023
Revenue £m £m
Outlet sales
864.6
832.8
Wholesale sales
26.2
30.2
Revenue from contracts with customers
890.8
863.0
Rental income
7.8
9. 3
Total revenue
898.6
872.3
2024 2023
Net operating expenses £m £m
Change in stocks of finished goods
0.3
(1.8)
Own work capitalised
−
(0.4)
Other operating income
(4.4)
(13.1)
Raw materials and consumables
222.6
225.7
Depreciation of property, plant, and equipment
40.0
40.5
Amortisation of intangible assets
5.3
5.0
Employee costs
209.6
213.1
(Impairment reversal)/impairment of freehold and leasehold properties
(5.9)
30.9
Other operating charges
279.4
282.2
Net operating expenses
746.9
782.1
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
1
are as follows:
2024 2023
£m £m
Employee costs
0.8
2.5
(Impairment reversal)/impairment of freehold and leasehold properties
(5.9)
30.9
Other operating charges
0.6
1.2
(4.5)
34.6
Additional information
103Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
3 REVENUE AND NET OPERATING EXPENSES CONTINUED
Fees payable to the Company’s Auditor were as follows:
2024 2023
RSM UK Audit LLP (2023: KPMG LLP) fees: £m £m
Fees payable to the Company’s Auditor for the audit of the
Company’s annual accounts
0.5
0.4
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
0.8
0.8
Audit related assurance services in respect of covenant reporting amounted to £22,500
(2023: £10,000).
4 NON-UNDERLYING
1
ITEMS
2024 2023
£m £m
Non-underlying
1
operating items from continuing operations
(Impairment reversal)/impairment of freehold and leasehold properties
(5.7)
31.2
Special discretionary pension increase
–
0.5
Reorganisation, restructuring and relocation costs
0.7
2.9
Duplication costs
0.5
–
(4.5)
34.6
Non-underlying
1
non-operating items from continuing operations
Interest rate swap movements
32.2
21.6
32.2
21.6
Total non-underlying
1
items from continuing operations
27.7
56.2
Non-underlying
1
items from discontinued operations
Non-underlying
1
loss from associate
16.6
–
Impairment of associate
8.0
–
Loss on disposal of associate
11.9
–
36.5
–
Total non-underlying
1
items
64.2
56.2
(Impairment reversal)/impairment of freehold and leasehold properties
At 30 June 2024 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:
2024 2023
£m £m
Impairment of property, plant and equipment (note 11)
37. 4
70.9
Reversal of past impairment of property, plant, and equipment (note 11)
(43.4)
(40.0)
Impairment of assets held for sale (note 19)
0.1
–
Valuation fees
0.2
0.3
(5.7)
31.2
Special discretionary pension increase
A past service cost of £0.5 million arose in the prior 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 prior period the Group commenced the implementation of an operational
programme to simplify the business and drive efficiencies. The programme was initiated
towards the end of the prior period resulting in costs being incurred in both the prior and
current periods. The costs identified are one-off headcount related costs and this element
of the programme is expected to be short-term in nature and non-recurring. The cost of
implementing this programme in the current period was £0.7 million (2023: £2.9 million).
Cumulatively, as at 28 September 2024 a cash cost of £3.6 million has been incurred, which
is considered material to the Group. The reorganisation, restructuring and relocation costs
have been recorded within non-underlying
1
items in the income statement based on their
materiality, nature and expected infrequency.
Duplication costs
On 17 November 2023 Andrew Andrea stepped down from his role as CEO of the Group
and, following an external process, Justin Platt was appointed as CEO from 10 January 2024.
During the current period duplicated costs were incurred as a result of the change in CEO
which were unusual and one-off for Marston’s. The duplicated costs have been recorded
within non-underlying
1
items in the income statement based on their nature and expected
infrequency.
Financial statementsStrategic report Governance Additional information
104 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
4 NON-UNDERLYING
1
ITEMS CONTINUED
Interest rate swap movements
The Group’s interest rate swaps are revalued to fair value at each balance sheet date.
For interest rate swaps which were designated as part of a hedging relationship a loss
of £2.8 million (2023: £3.0 million) has been recognised in the hedging reserve in respect
of the effective portion of the fair value movement and a credit of £0.4 million (2023:
charge of £2.1 million) has been reclassified from the hedging reserve to underlying
1
finance costs in the income statement in respect of the cash received/paid in the period.
A loss of £0.2 million (2023: £0.6 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 £1.2 million (2023: £1.4 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 £1.0 million (2023: £0.8 million) recognised within non-
underlying
1
items in the income statement based on its materiality and nature. In addition,
£8.0 million (2023: £9.3 million) of the balance remaining in the hedging reserve in respect
of discontinued cash flow hedges has been reclassified as a charge to the income
statement within non-underlying
1
items based on its materiality and nature.
For interest rate swaps which were not designated as part of a hedging relationship
a loss of £18.2 million (2023: £9.5 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 £7.0 million (2023: £3.6 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 £25.2 million (2023: £13.1 million) recognised within non-underlying
1
items in the income
statement based on its materiality and nature, which is equal to the change in the carrying
value of the interest rate swaps in the period or up to the date of termination/disposal.
Non-underlying
1
loss from associates
The Group’s associate, Carlsberg Marston’s Limited, recognised an impairment (of which
the Group’s share was £14.0 million) during the current period in relation to some of the
ale brands that it holds. The ale category has been severely impacted by the COVID-19
pandemic, secular trends, and the cost-of-living crisis, resulting in long-term expectations
specifically for the ale brands being updated. The brand impairment of £14.0 million is
material in the context of both the Group’s total results and the underlying
1
income from
associates of £0.5 million. The resulting brand impairment has been recorded within
non-underlying
1
items in the income statement based on its materiality, nature and
expected infrequency.
Carlsberg Marston’s Limited also recognised an onerous contract provision (of which the
Group’s share was £2.6 million) during the current period in relation to a specific porterage
contract that it holds. The significant cost inflation experienced from the cost-of-living
crisis, alongside the increases in distribution costs over and above what was reasonably
anticipated has led to an acute and short-term (rather than business-as-usual) environment
of cost inflation which has required an onerous provision to be recorded for this specific
contract. The onerous contract provision of £2.6 million is material in the context of the
underlying
1
income from associates of £0.5 million. The resulting onerous contract provision
has been recorded within non-underlying
1
items in the income statement based on its
materiality, nature and expected infrequency.
Impairment of associate and loss on disposal of associate
On 31 July 2024, Marston’s PLC completed the sale of its remaining non-core brewing
assets, being its 40% interest in Carlsberg Marston’s Limited (“CMBC”), to a subsidiary of
Carlsberg A/S for £206.0 million in cash, to create a business entirely focused on pubs.
An impairment assessment over the carrying value of the Group’s investment in CMBC
was performed immediately prior to disposal on 31 July 2024. The result of the impairment
assessment was an impairment to the carrying value of the Group’s investment in CMBC of
£8.0 million (note 12). The remaining difference between the newly impaired carrying value
of the investment and the net disposal proceeds represents a loss on disposal of £11.9 million
(note 12).
These costs have been recorded within non-underlying
1
items in the income statement
based on their materiality, nature and expected infrequency.
Impact of taxation
The current tax credit relating to the above non-underlying
1
items amounts to £0.1 million
(2023: £nil). The deferred tax credit relating to the above non-underlying
1
items amounts
to £12.0 million (2023: £14.9 million).
Additional information
105Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
5 EMPLOYEES
2024 2023
Employee costs £m £m
Wages and salaries
185.8
188.0
Social security costs
14.6
15.6
Pension costs
6.4
7.1
Share-based payments
2.0
0.4
Termination benefits
0.8
2.0
Employee costs for continuing operations
209.6
213.1
A non-underlying
1
charge of £0.8 million (2023: £2.5 million) is included in employee costs
in the current period.
2024 2023
Average monthly number of employees Number Number
Bar staff
9,228
10,965
Management, administration and production
1,134
1,327
2024 2023
Key management personnel compensation £m £m
Short-term employee benefits
2.3
1.7
Share-based payments
0.6
0.1
Termination benefits
0.2
–
3.1
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 46 and 47 of the
Annual Report and Accounts 2024. Details of remuneration for Directors, including
the highest paid Director, are presented in the Annual Report on Remuneration on
pages 68 to 76.
6 FINANCE COSTS AND INCOME
2024 2023
Finance costs £m £m
Bank borrowings
25.4
23.8
Securitised debt
35.3
32.4
Lease liabilities
19.2
19.3
Other lease related borrowings
22.9
22.3
Other interest payable and similar charges
3.7
2.6
Total finance costs
106.5
100.4
Finance income
Finance lease and other interest receivable
(1.4)
(1.2)
Total finance income
(1.4)
(1.2)
Interest rate swap movements
Hedge ineffectiveness on cash flow hedges (net of cash paid)
(1.0)
(0.8)
Change in carrying value of interest rate swaps
25.2
13.1
Transfer of hedging reserve balance in respect of discontinued hedges
8.0
9.3
32.2
21.6
Net finance costs for continuing operations
137. 3
120.8
7 TAXATION
2024 2023
Income statement £m £m
Current tax
Current period
4.6
0.1
Adjustments in respect of prior periods
–
(0.3)
Credit in respect of tax on non-underlying
1
items
(0.1)
–
4.5
(0.2)
Deferred tax
Current period
5.2
5.5
Adjustments in respect of prior periods
(0.8)
(1.8)
Credit in respect of tax on non-underlying
1
items
(12.0)
(14.9)
(7.6)
(11. 2 )
Taxation credit reported in the income statement from continuing
operations
(3.1)
(11. 4)
Financial statementsStrategic report Governance Additional information
106 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
7 TAXATION CONTINUED
Statement of comprehensive income
2024 2023
£m £m
Remeasurement of retirement benefits
(1.7)
(2.3)
Impairment and revaluation of properties
9.8
2.5
Hedging reserve movements
1.2
2.1
Taxation charge reported in the statement of comprehensive income
9.3
2.3
A taxation credit in relation to tax on share-based payments of £0.1 million (2023: £nil)
has been recognised directly in equity.
The actual tax rate for the period is lower (2023: higher) than the standard rate of
corporation tax of 25% (2023: 22%). The differences are explained below:
2023
2024 (Restated)
Tax reconciliation £m £m
Profit/(loss) before tax from continuing operations
14.4
(30.6)
Profit/(loss) before tax multiplied by the corporation tax rate
of 25% (2023: 22%)
3.6
(6.8)
Effect of:
Adjustments in respect of prior periods
(0.8)
(2.1)
Change in deferred tax asset not recognised
(5.4)
1.0
Net deferred tax charge/(credit) in respect of land and buildings
0.2
(1.2)
Costs not deductible for tax purposes
0.1
0.1
Other amounts on which tax relief is available
(0.8)
(1.2)
Difference between deferred and current tax rates
–
(1.2)
Taxation credit for continuing operations
(3.1)
(11. 4)
The March 2021 Budget announced that the main rate of corporation tax would change
from 19% to 25% with effect from 1 April 2023. This change was substantively enacted on
24 May 2021. As such the Group’s results for the current period have been taxed at a rate
of 25% and the results for the prior period were taxed at a rate of 22%. This has increased
the Group’s current tax charge accordingly. The deferred tax assets and liabilities at
28 September 2024 have been calculated at 25% (2023: 25%).
In December 2021, the Organisation for Economic Co-operation and Development (OECD)
published the Pillar Two model rules to introduce a minimum global effective tax rate
of 15%, under their Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
UK legislation adopting the Pillar Two rules was substantively enacted on 20 June 2023
and will apply to the Group for the 52 weeks ended 27 September 2025 onwards. Therefore,
there is no impact on income taxes for the 52 weeks ended 28 September 2024.
The Group continues to monitor and assess the impact of the new rules and prepare for
compliance for the 52 weeks ended 27 September 2025 onwards. Based on the analysis
derived from data in respect of current and prior periods, the Group’s potential exposure
to Pillar Two taxes is not expected to be material.
The Group has applied the temporary exception under IAS 12 ‘Income Taxes’ in relation
to the accounting for deferred taxes arising from the implementation of the Pillar Two rules.
8 DISCONTINUED OPERATIONS
On 8 July 2024, the Group announced the sale of its remaining non-core brewing assets,
with a binding agreement to sell the whole of its 40% interest in Carlsberg Marston’s Limited
to a subsidiary of Carlsberg A/S for £206.0 million in cash. The transaction subsequently
completed on 31 July 2024.
The Directors considered that Carlsberg Marston’s Limited constituted a separate major line
of business that had been disposed of and as a result met the criteria to be classified as
a discontinued operation.
The interest in Carlsberg Marston’s Limited was not previously classified as held for sale
or within discontinued operations. As such the income statement for the 52 weeks ended
30 September 2023 has been restated to show discontinued operations separately from
continuing operations.
Additional information
107Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
8 DISCONTINUED OPERATIONS CONTINUED
Results of discontinued operations
2024
2023
Non- Non-
underlying
1
underlying
1
Underlying
1
(note 4) Total
Underlying
1
(note 4) Total
£m £m £m £m £m £m
Revenue
–
–
–
–
–
–
Net operating expenses
–
–
–
–
–
–
Income/(loss) from
associates
0.5
(16.6)
(16.1)
9.9
–
9.9
Operating profit/(loss)
0.5
(16.6)
(16.1)
9.9
–
9.9
Net finance costs
–
–
–
–
–
–
Profit/(loss) before
taxation
0.5
(16.6)
(16.1)
9.9
–
9.9
Taxation
–
–
–
–
–
–
Profit/(loss) for the
period attributable to
equity shareholders
0.5
(16.6)
(16.1)
9.9
–
9.9
Impairment of
investment in associates
–
(8.0)
(8.0)
–
–
–
Loss on disposal of
associates
–
(11.9)
(11.9)
–
–
–
Profit/(loss) from
discontinued operations
0.5
(36.5)
(36.0)
9.9
–
9.9
Non-underlying
1
operating items in the current period relate to an impairment in relation to
some of the ale brands and an onerous contract provision in relation to a specific porterage
contract held by Carlsberg Marston’s Limited. A loss on disposal of £11.9 million arose on
the disposal of Carlsberg Marston’s Limited, being the difference between the net disposal
proceeds and the carrying amount of the investment in the associate of £214.5 million.
Cash flows from discontinued operations
2024 2023
£m £m
Net cash inflow from operating activities
13.8
21.6
Net cash inflow from investing activities
205.5
–
Net cash inflow from financing activities
–
–
Net increase in cash and cash equivalents
219.3
21.6
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
1
earnings/(loss) per share figures are presented to exclude the effect of non-
underlying
1
items. The Directors consider that the supplementary figures are a useful
indicator of performance.
2024
2023 (Restated)
Per share Per share
Earnings amount Earnings amount
£m p £m p
Basic (loss)/earnings per share
Total
(18.5)
(2.9)
(9. 3)
(1.5)
Continuing
17. 5
2.8
(19. 2)
(3.0)
Discontinued
(36.0)
(5.7)
9.9
1.6
Diluted (loss)/earnings per share
Total
(18.5)
(2.8)
(9.3)
(1.5)
Continuing
17. 5
2.7
(19. 2)
(3.0)
Discontinued
(36.0)
(5.5)
9.9
1.6
Underlying
1
earnings per share figures
Basic underlying
1
earnings per share
Total
33.6
5.3
32.0
5.1
Continuing
33.1
5.2
22.1
3.5
Discontinued
0.5
0.1
9.9
1.6
Diluted underlying
1
earnings per share
Total
33.6
5.1
32.0
5.1
Continuing
33.1
5.0
2 2.1
3.5
Discontinued
0.5
0.1
9.9
1.6
Financial statementsStrategic report Governance Additional information
108 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
2024 2023
m m
Basic weighted average number of shares
633.5
633.3
Dilutive potential ordinary shares
23.0
–
Diluted weighted average number of shares
656.5
633.3
In the prior 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 from continuing
operations.
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 28 September 2024 and 30 September 2023.
Other intangible assets
Computer
software
£m
Cost
At 1 October 2023
50.7
Additions
1.9
Net transfers to assets held for sale and disposals
(1.0)
At 28 September 2024
51.6
Amortisation
At 1 October 2023
17. 8
Charge for the period
5.3
Net transfers to assets held for sale and disposals
(0.8)
At 28 September 2024
22.3
Net book amount at 30 September 2023
32.9
Net book amount at 28 September 2024
29.3
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
11 PROPERTY, PLANT AND EQUIPMENT
Effective Fixtures,
freehold Leasehold fittings,
land and land and tools and
buildings buildings equipment Total
£m £m £m £m
Cost or valuation
At 1 October 2023
1,645.1
434.4
280.1
2, 359.6
Additions
17. 2
10.7
22.5
50.4
Disposals
(44.7)
(15.1)
(26.4)
(86.2)
Net transfers to assets held for sale
(1.2)
–
(0.1)
(1.3)
Revaluation
45.3
–
–
45.3
At 28 September 2024
1,661.7
430.0
276.1
2,367.8
Depreciation
At 1 October 2023
–
14 7. 6
147. 2
294.8
Charge for the period
–
13.8
26.2
40.0
Disposals
–
(10.7)
(23.6)
(34.3)
Impairment
–
(1.7)
–
(1.7)
At 28 September 2024
–
149.0
149.8
298.8
Net book amount at 30 September 2023
1,6 4 5.1
286.8
132.9
2,064.8
Net book amount at 28 September 2024
1,661.7
281.0
126.3
2,069.0
9 EARNINGS PER ORDINARY SHARE CONTINUED
Additional information
109Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
11 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Effective Fixtures,
freehold Leasehold fittings,
land and land and tools and
buildings buildings equipment Total
£m £m £m £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
The net book amount of land and buildings is split as follows:
2024 2023
£m £m
Freehold land and buildings
1,485.4
1, 4 7 7.2
Leasehold land and buildings with a term greater than 100 years
at acquisition/commencement
176.3
167.9
Leasehold land and buildings with a term less than 100 years
at acquisition/commencement
281.0
286.8
1,942.7
1,931.9
If the effective freehold land and buildings had not been revalued, the historical cost
net book amount would be £1,138.9 million (2023: £1,149.5 million).
Cost at 28 September 2024 includes £1.8 million (2023: £nil) of assets in the course
of construction.
Interest costs of £nil (2023: £0.1 million) were capitalised in the period in respect of the
financing of major projects. The capitalisation rate used in the prior period was 6%.
The net profit on disposal of property, plant and equipment, intangible assets and
properties classified as held for sale was a loss of £3.3 million (2023: profit of £7.9 million).
Capital expenditure authorised and committed at the period end but not provided
for in the financial statements was £1.0 million (2023: £1.0 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 IFRS 16 ‘Leases’ was £267.7 million
(2023: £251.8 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:
2024
2023
Leased to Used by Leased to Used by
Effective freehold tenants the Group Total tenants the Group Total
land and buildings £m £m £m £m £m £m
Cost or valuation
124.0
1,537.7
1,661.7
173.8
1,471.3
1,64
5.1
Depreciation
–
–
–
–
–
–
Net book amount
124.0
1,537.7
1,661.7
173.8
1,471.3
1,645.1
2024
2023
Leased to Used by Leased to Used by
Leasehold land tenants the Group Total tenants the Group Total
and buildings £m £m £m £m £m £m
Cost
19.7
410.3
430.0
21.6
412.8
434.4
Depreciation
(8.5)
(140.5)
(149.0)
(8.3)
(139. 3)
(147. 6)
Net book amount
11. 2
269.8
281.0
13.3
273.5
286.8
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’.
Financial statementsStrategic report Governance Additional information
110 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
11 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Revaluation/impairment
At 30 June 2024 independent chartered surveyors revalued the Group’s effective freehold
properties on an open market value basis. During the current and prior period various
assets were also reviewed for impairment and/or material changes in value. These
valuation adjustments were recognised in the revaluation reserve or the income statement
as appropriate.
2024 2023
£m £m
Income statement:
Impairment
(37. 4)
(70.9)
Reversal of past impairment
43.4
40.0
6.0
(30.9)
Revaluation reserve:
Unrealised revaluation surplus
80.8
95.6
Reversal of past revaluation surplus
(39.8)
(93.9)
41.0
1.7
Net increase/(decrease) in shareholders’ equity/property,
plant and equipment
47. 0
(29. 2)
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:
2024
Level 1 Level 2 Level 3 Total
Recurring fair value measurements £m £m £m £m
Effective freehold land and buildings
–
–
1,661.7
1,661.7
2023
Level 1 Level 2 Level 3 Total
Recurring fair value measurements £m £m £m £m
Effective freehold land and buildings
–
–
1,645.1
1,645.1
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.
The number of effective freehold properties that have been valued within each fair
maintainable trade (FMT) band of income is as follows:
Valuation multiple applied to FMT
28 September 2024
≤ 8
8-9
9-10
10 -11
> 11
Total
Number of pubs in each FMT band of income:
≤ £100k p.a.
18
96
240
24
5
383
£100k – £200k p.a.
8
113
237
58
2
418
≥ £200k p.a.
–
27
160
119
1
307
26
236
637
201
8
1,108
Valuation multiple applied to FMT
30 September 2023
≤ 8
8-9
9-10
10 -11
> 11
Total
Number of pubs in each FMT band of income:
≤ £100k p.a.
12
92
302
44
13
463
£100k – £200k p.a.
5
55
279
93
2
434
≥ £200k p.a.
–
15
132
123
6
276
17
162
713
260
21
1,173
Additional information
111Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
11 PROPERTY, PLANT AND EQUIPMENT CONTINUED
A reasonably possible increase of 10% in the multiple would increase the fair value by
£174.4 million and a reasonably possible decrease of 10% in the multiple would decrease
the fair value by £174.4 million. A reasonably possible increase of 4% in the fair maintainable
trade would increase the fair value by £69.8 million and a reasonably possible decrease
of 4% in the fair maintainable trade would decrease the fair value by £69.8 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 30 June 2024. 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 30 June 2024 does not differ materially from that which would have
been determined using fair value as at 28 September 2024.
2024 2023
Level 3 recurring fair value measurements £m £m
At beginning of the period
1,645.1
1,682.4
Additions
17. 2
25.5
Transfers
–
(1.6)
Disposals
(44.7)
(3 7. 2)
Net transfers (to)/from assets held for sale
(1.2)
0.3
Revaluation gains and losses recognised in profit or loss
4.3
(26.0)
Revaluation gains and losses recognised in other comprehensive income
41.0
1.7
At end of the period
1,661.7
1,645.1
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 gains of £5.7 million (2023: losses of £24.8 million) and net
realised losses of £1.4 million (2023: £1.2 million).
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% (2023: 12.2%) and a long-term growth rate of 2.0%
(2023: 1.8%). No adjustment has been made in the current period for any potential climate
change related impact as the future potential additional cash inflows and outflows are
not deemed to be a key assumption in the value in use calculations.
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 £0.6 million decrease in the net impairment
reversal recognised. If the pre-tax discount rate were to increase by 0.5% it would decrease
the net impairment reversal by £0.4 million. If the long-term growth rate were to decrease
by 0.5% it would decrease the net impairment reversal by £0.6 million.
Market capitalisation
Uncertainty during recent financial periods, including COVID-19 and the cost-of-living crisis,
has negatively impacted the Company’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 bridge the gap between the Group’s market capitalisation
and asset values and therefore to determine whether further impairment considerations
are required in relation to the Group’s material assets, property, plant and equipment. An
enterprise value has been calculated to support the asset value of the Group. Additionally,
a value in use was calculated which was based on a pre-tax discount rate of 10.7% (2023:
9.7%), cash flow projections from the Group’s base case going concern forecast in the
short-term, and a long-term growth rate of 2.0% (2023: 1.8%). No adjustment has been
made in the current period for any potential climate change related impact as the future
potential additional cash inflows and outflows are not deemed to be a key assumption in
the value in use calculations. The recoverable amount adopted in this assessment was the
higher of the enterprise value and the value in use of the Group. This assessment indicated
that there was sufficient headroom between the asset values and the recoverable amount
of the Group. No reasonably possible change in the assumptions used in this assessment
would have resulted in a change to the Group’s asset values. Sensitivities in the values of
the Group’s property, plant and equipment are disclosed above.
Financial statementsStrategic report Governance Additional information
112 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
12 INTERESTS IN ASSOCIATES
On 8 July 2024, the Group announced the sale of its remaining non-core brewing assets,
with a binding agreement to sell the whole of its 40% interest in Carlsberg Marston’s Limited
to a subsidiary of Carlsberg A/S for £206.0 million in cash. The transaction subsequently
completed on 31 July 2024. Carlsberg Marston’s Limited remains 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 2023 to 31 July 2024,
adjusting for differences in accounting policies. The comparison is for the period from
1 October 2022 to 30 September 2023.
2024 2023
£m £m
Non-current assets
2 87.9
290.4
Current assets
359.7
263.8
Current liabilities
(461.6)
(334.4)
Non-current liabilities
(137.7 )
(100.7)
Net assets
48.3
119.1
Group’s share of net assets (40%)
19.3
47. 6
Goodwill
203.9
203.9
Elimination of unrealised profit on upstream sales
(0.7)
(0.6)
Carrying amount of interest in associates as at 31 July 2024
222.5
250.9
2024 2023
£m £m
Revenue
790.6
8 7 7.2
(Loss)/profit from continuing operations
(39.9)
24.7
Other comprehensive (expense)/income
(0.3)
1.9
Total comprehensive (expense)/income
(40.2)
26.6
Group’s share of (loss)/profit from continuing operations (40%)
(16.0)
9.9
Elimination of unrealised profits on upstream sales
(0.1)
–
(Loss)/income from associates recognised in the income statement
(16.1)
9.9
Group’s share of other comprehensive (expense)/income (40%)
(0.1)
0.8
Group’s share of total comprehensive (expense)/income
(16.2)
10.7
A reconciliation of the movement in the carrying amount of the interest in associates
is as follows:
£m
Carrying amount of interest in associates as at 1 October 2023
250.9
Loss from associates
(16.1)
Other comprehensive expense of associates
(0.1)
Changes in equity of associates
1.6
Dividends from associates
(13.8)
Carrying amount of interest in associates as at 31 July 2024 before impairment
222.5
Impairment of associates
8.0
Carrying amount of interest in associates as at 31 July 2024 prior to disposal
214.5
£m
Carrying amount of interest in associates as at 2 October 2022
260.3
Income from associates
9.9
Other comprehensive income of associates
0.8
Changes in equity of associates
1.5
Dividends from associates
(21.6)
Carrying amount of interest in associates as at 30 September 2023
250.9
Impairment indicators in respect of the carrying value of the investment immediately prior
to disposal were identified, which included the net disposal proceeds being less than the
carrying value of the investment. Other circumstances considered that were key to the
impairment assessment included:
• A further decline to cask ale volume projections from those considered in the
impairment recognised in the results for the 26 weeks ended 30 March 2024.
• The long-term exclusive licensed production and distribution agreement between
Mahou San Miguel and Carlsberg Marston’s Limited will end on 31 December 2024
(announced 2 July 2024).
• Carlsberg Marston’s Limited’s planned rationalisation of the UK brewery network resulting
in the announcement of the closure of the Banks’s brewery.
Additional information
113Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
12 INTERESTS IN ASSOCIATES CONTINUED
The Group has recognised an impairment to the carrying value of the investment
immediately prior to disposal of £8.0 million. The amount of the impairment in this case is
a judgemental matter due to the circumstances at hand, including inherent uncertainty
over the future cash flows of Carlsberg Marston’s Limited. The impairment has been
disclosed as a key source of estimation uncertainty.
The remaining difference between the newly impaired carrying value of the investment
and the net disposal proceeds represents a loss on disposal of £11.9 million.
Details of related party transactions with Carlsberg Marston’s Limited are as follows:
Transaction amount
Balance outstanding
2024 2023 2024 2023
£m £m £m £m
Purchase of goods
(146.2)
(181.5)
–
(29.4)
Dividends from associate
13.8
21.6
–
–
Receipt of cash on behalf of associate
–
(1.6)
–
–
All outstanding balances were to be settled within six months and were unsecured.
Carlsberg Marston’s Limited ceased to be a related party of the Group on 31 July 2024.
13 OTHER NON-CURRENT ASSETS
2024 2023
£m £m
Finance lease receivables
14.4
15.0
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%
(2023: 25%). The movement on the deferred tax accounts is shown below:
2024 2023
Net deferred tax liability/(asset) £m £m
At beginning of the period
(0.9)
8.0
Credited to the income statement – continuing operations
(7.6)
(11. 2)
Charged/(credited) to equity:
Impairment and revaluation of properties
9.8
2.5
Hedging reserve
1.2
2.1
Retirement benefits
–
(2.3)
Share-based payments
(0.1)
–
At end of the period
2.4
(0.9)
2024 2023
Recognised in the balance sheet £m £m
Deferred tax liabilities (after offsetting)
2.4
–
Deferred tax assets (after offsetting)
–
(0.9)
2.4
(0.9)
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.
Accelerated Rolled over
capital Revaluation capital
Pensions allowances of properties gains IFRS 16 Total
Deferred tax liabilities £m £m £m £m £m £m
At 1 October 2023 (restated)
3.2
48.9
55.6
4.4
61.3
173.4
Charged/(credited) to the
income statement
0.1
2.8
0.4
(1.2)
(1.4)
0.7
Charged/(credited) to equity
–
–
10.0
–
(0.2)
9.8
At 28 September 2024
3.3
51.7
66.0
3.2
59.7
183.9
Financial statementsStrategic report Governance Additional information
114 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
14 DEFERRED TAX CONTINUED
Interest
Tax losses rate swaps Other IFRS 16 Total
Deferred tax assets £m £m £m £m £m
At 1 October 2023 (restated)
(62.3)
(7. 4 )
(30.0)
(74 . 6)
(174. 3)
Charged/(credited) to the income
statement
0.3
(8.1)
(1.7)
1.2
(8.3)
Charged/(credited) to equity
–
1.2
(0.1)
–
1.1
At 28 September 2024
(62.0)
(14.3)
(31.8)
(73.4)
(181.5)
Net deferred tax liability/(asset)
At 30 September 2023
(0.9)
At 28 September 2024
2.4
The Group previously accounted for deferred tax on lease liabilities under the net
approach. As a result of the adoption of the amendments to IAS 12, the comparative
information for the 52 weeks ended 30 September 2023 has been restated to reflect the
separation of the opening deferred tax liability of £63.6 million and opening deferred tax
asset of £76.2 million, and closing deferred tax liability of £61.3 million and closing deferred
tax asset of £74.6 million, in relation to the accounting for deferred tax on right-of-use assets
and the associated lease liabilities. There was no material impact on the opening position
of the comparative information as the offsetting criteria of IAS 12 has been met, allowing
for the deferred tax asset and deferred tax liability to be presented net within the Group’s
balance sheet.
Accelerated Rolled over
capital Revaluation capital IFRS 16 Total
Pensions allowances of properties gains (restated) (restated)
Deferred tax liabilities £m £m £m £m £m £m
At 2 October 2022
3.8
45.7
55.9
4.6
63.6
173.6
Charged/(credited) to
the income statement
–
3.2
(2.8)
(0.2)
(2.3)
(2.1)
(Credited)/charged
to equity
(0.6)
–
2.5
–
–
1.9
At 30 September 2023
3.2
48.9
55.6
4.4
61.3
173.4
Interest rate Other IFRS 16 Total
Tax losses swaps (restated) (restated) (restated)
Deferred tax assets £m £m £m £m £m
At 2 October 2022
(5 7. 4 )
(3.9)
(28.1)
(76.2)
(165.6)
(Credited)/charged to the income
statement
(3.2)
(5.6)
(1.9)
1.6
(9.1)
(Credited)/charged to equity
(1.7)
2.1
–
–
0.4
At 30 September 2023
(62.3)
(7. 4)
(30.0)
(74.6)
(174.3)
Net deferred tax (asset)/liability
At 1 October 2022
8.0
At 30 September 2023
(0.9)
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.
The net deferred tax asset in respect of trading losses which has been recognised, based
on the utilisation against future taxable profits, is £32.9 million (2023: £31.6 million).
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 relating to capital losses of £20.2 million (2023: £42.9 million) due to uncertainty
over its future recoverability.
Additional information
115Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
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:
2024 2023
£m £m
Defined contribution plans
6.4
6.6
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 composed of plan participants and representatives of the Group. The Trustees
make 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.
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 Present value of defined
of plan assets
benefit obligation
Net surplus
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
At beginning of the period
344.7
374.6
(331.8)
(359.5)
12.9
15.1
Past service cost
–
–
–
(0.5)
–
(0.5)
Interest income/(expense)
19.0
19.1
(18.1)
(18.2)
0.9
0.9
Remeasurements:
Return on plan assets
(excluding interest income)
12.0
(33.4)
–
–
12.0
(33.4)
Effect of changes in financial
assumptions
–
–
(20.3)
23.0
(20.3)
23.0
Effect of changes in
demographic assumptions
–
–
1.0
6.6
1.0
6.6
Effect of experience
adjustments
–
–
0.5
(5.4)
0.5
(5.4)
Cash flows:
Employer contributions
7.5
8.1
–
–
7. 5
8.1
Administrative expenses paid
from plan assets
(1.4)
(1.5)
–
–
(1.4)
(1.5)
Benefits paid
(19.6)
(22.2)
19.6
22.2
–
–
At end of the period
362.2
344.7
(349.1)
(331.8)
13.1
12.9
Pension costs recognised in the income statement
A charge of £nil (2023: £0.5 million) comprising the past service cost is included within
employee costs, a credit of £0.9 million (2023: £0.9 million) comprising the net interest on
the net defined benefit asset/liability is included within finance costs and a charge of
£1.4 million (2023: £1.5 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 prior period. The resulting additional
past service cost of £nil (2023: £0.5 million) was classified as a non-underlying
1
item (note 4).
Financial statementsStrategic report Governance Additional information
116 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
15 RETIREMENT BENEFITS CONTINUED
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 28 September 2024 for the purposes of IAS 19. The principal assumptions made by the
actuaries were:
2024
2023
Discount rate
5.0%
5.6%
Rate of increase in pensions – 5% LPI
2.9%
3.0%
Rate of increase in pensions – 2.5% LPI
2.0%
2.0%
Inflation assumption (RPI)
3.1%
3.2%
Inflation assumption (CPI)
2.5%
2.5%
Employed deferred revaluation
2.5%
2.5%
Life expectancy for deferred members from age 65 (years)
Male
22.4
22.4
Female
25.0
25.0
Life expectancy for current non-insured pensioners from age 65 (years)
Male
20.4
20.4
Female
23.1
23.0
Life expectancy for current insured pensioners from age 65 (years)
Male
21.3
21.3
Female
23.5
23.4
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 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
Increase obligation
by 5.2% by 5.7%
Inflation assumption
0.25%
Increase obligation
Decrease obligation
by 1.2% by 1.2%
Life expectancy
1 year
Increase obligation
Decrease obligation
by 3.3% by 3.3%
The above sensitivity analyses have been determined by changing one assumption while
holding all other assumptions constant. The calculations are approximate in nature and
full detailed calculations could lead to a different result. In practice, interrelationships exist
between the assumptions, particularly between the discount rate and price inflation.
The 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 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 analyses.
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 the defined benefit obligation calculated using the Projected Unit Credit Method.
2024 2023
Plan assets £m £m
Equities
–
3.4
Bonds/Gilts
149.7
125.5
Cash/Pooled investments
52.4
56.1
Buy-in policies (matching annuities)
160.1
159.7
362.2
344.7
The Group’s balance sheet date of 28 September 2024 is a Saturday and, accordingly, the
fair values of plan assets have been calculated as at 27 September 2024. There were no
significant transactions between the respective reporting dates.
The plan holds £175.7 million (2023: £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 £26.4 million (2023: £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.
Additional information
117Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
15 RETIREMENT BENEFITS CONTINUED
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. None of the insurance providers are related parties of the
Group. 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 gain of £31.0 million (2023: loss of £14.3 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.
In the prior period 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.
A schedule of contributions was agreed as part of the 30 September 2023 triennial valuation
and contributions of £0.5 million per month were payable until 30 September 2024 when
the plan’s funding deficit was expected to be eliminated. Contributions are also payable
in respect of the plan’s expenses. The next triennial valuation will be performed as at
30 September 2026.
The employer contributions expected to be paid during the financial period ending
27 September 2025 amount to £1.7 million.
The weighted average duration of the defined benefit obligation is 11 years (2023: 11 years).
The Group is aware that the Court of Appeal has recently upheld the decision in the
Virgin Media vs NTL Pension Trustees II Limited case. The decision puts into question the
validity of any amendments made in respect of the rules of a contracted-out pension
scheme between 6 April 1997 and 5 April 2016. The judgment means that some historic
amendments affecting s.9(2B) rights could be void if the necessary actuarial confirmation
under s.37 of the Pension Schemes Act 1993 was not obtained. Until further investigations
have been completed by the Trustees and/or any legislative action taken by the
government, the potential impact if any, on the valuation of the plan’s defined benefit
obligation remains unknown.
Post-retirement medical benefits
A loss of £0.1 million (2023: £nil) in respect of the remeasurement of post-retirement medical
benefits has been included in the statement of comprehensive income.
16 DERIVATIVE FINANCIAL INSTRUMENTS
2024 2023
Interest rate swaps £m £m
Non-current assets
0.4
2.7
Current assets
–
1.1
Non-current liabilities
(59.4)
( 37. 4 )
(59.0)
(33.6)
Details of the Group’s interest rate swaps are provided in note 25.
17 INVENTORIES
2024 2023
£m £m
Raw materials and consumables
4.1
4.3
Finished goods
10.3
10.6
14.4
14.9
18 TRADE AND OTHER RECEIVABLES
2024 2023
£m £m
Trade receivables
12.2
12.2
Prepayments and accrued income
8.9
9.3
Finance lease receivables
1.5
1.7
Other receivables
3.3
3.7
25.9
26.9
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 28 September 2024 the value of collateral held in the form of cash deposits was
£5.5 million (2023: £5.6 million).
Financial statementsStrategic report Governance Additional information
118 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
19 ASSETS HELD FOR SALE
2024 2023
£m £m
Properties
1.3
1.4
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 impairment or reversal of past impairment. This review identified an impairment of
£0.1 million (2023: £nil) which has been recognised in the income statement.
20 BORROWINGS
2024 2023
Current £m £m
Bank borrowings
(2.5)
(2.6)
Securitised debt
43.5
41.1
Lease liabilities
17.7
17. 8
Other lease related borrowings
(0.5)
(0.4)
Other borrowings
–
10.0
58.2
65.9
2024 2023
Non-current £m £m
Bank borrowings
33.0
228.2
Securitised debt
516.7
560.2
Lease liabilities
356.0
362.6
Other lease related borrowings
338.9
338.4
Other borrowings
–
40.0
Preference shares
0.1
0.1
1,244.7
1, 529. 5
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 (2023: 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 in the
prior period, for which waivers were secured. There were no instances of default, including
covenant terms in the current period.
Maturity of borrowings
The maturity profile of the carrying amount of the Group’s borrowings at the period end
was as follows:
2024
2023
Gross Unamortised Net Gross Unamortised Net
borrowings issue costs borrowings borrowings issue costs borrowings
Due: £m £m £m £m £m £m
Within one year
61.6
(3.4)
58.2
69.3
(3.4)
65.9
In more than
one year but less
than two years
92.2
(2.9)
89.3
323.2
(1.6)
321.6
In more than
two years but less
than five years
189.4
(2.6)
186.8
180.8
(2.7)
178.1
In more than
five years
989.6
(21.0)
968.6
1,051.7
(21.9)
1,0 2 9. 8
1,332.8
(29.9)
1,302.9
1,625.0
(29.6)
1,595.4
Additional information
119Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
20 BORROWINGS CONTINUED
Fair value of borrowings
The carrying amount and the fair value of the Group’s borrowings are as follows:
Carrying amount
Fair value
2024 2023 2024 2023
£m £m £m £m
Bank borrowings
35.0
22 9.0
35.0
22 9.0
Securitised debt
562.3
603.8
502.9
520.8
Lease liabilities
373.7
380.4
373.7
380.4
Other lease related borrowings
361.7
361.7
361.7
361.7
Other borrowings
–
50.0
–
50.0
Preference shares
0.1
0.1
0.1
0.1
1,332.8
1,625.0
1,273.4
1,542.0
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 an amendment and extension
of its bank facility, which was due to expire in January 2025. The revised £340.0 million of
funding comprised £300.0 million of bank facilities, maturing in July 2026, and an additional
£40.0 million bank facility with a maturity of up to July 2026, drawings of which needed
to be used to repay the existing £40.0 million private placement debt facility maturing
in January 2025.
Following the sale of the Group’s 40% interest in Carlsberg Marston’s Limited for £206.0 million
in cash, an additional amendment was made to the Group’s bank facilities. The revised
£340.0 million of funding was successfully reduced to £200.0 million comprising
a £200.0 million bank facility only.
The Group’s sources of funding also include a £5.0 million seasonal overdraft facility which
extends to £20.0 million between the months of January and May and its securitised debt.
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 28 September 2024 was £1,155.2 million
(2023: £1,166.6 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 tranches of securitised debt have the following principal terms:
Principal
2024 2023 repayment period Expected Expected
Tranche £m
£m
Interest
– by instalments average life maturity date
A2
99.5
129.2
Fixed/floating
2024 to 2027
3 years
2027
A3
200.0
200.0
Fixed/floating
2027 to 2032
8 years
2032
A4
107. 8
119. 6
Floating
2024 to 2031
7 years
2031
B
155.0
155.0
Fixed/floating
2032 to 2035
11 y e a r s
2035
562.3
603.8
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
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 28 September 2024 Marston’s Pubs Limited held cash of £33.6 million (2023: £20.0 million),
which was governed by certain restrictions under the covenants associated with the
securitisation. In addition, Marston’s Issuer PLC held cash of £0.4 million (2023: £0.1 million).
Financial statementsStrategic report Governance Additional information
120 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
22 TRADE AND OTHER PAYABLES
2024 2023
£m £m
Trade payables
65.0
66.3
Other taxes and social security
29.3
25.6
Accruals and deferred income
72.0
65.6
Other payables
13.2
12.9
179.5
170.4
23 PROVISIONS FOR OTHER LIABILITIES AND CHARGES
2024 2023
Property leases £m £m
At beginning of the period
4.0
4.3
Released in the period
(0.4)
(0.7)
Provided in the period
0.8
0.8
Unwinding of discount
0.1
0.2
Utilised in the period
(1.3)
(0.6)
At end of the period
3.2
4.0
2024 2023
Recognised in the balance sheet £m £m
Current liabilities
0.6
1.4
Non-current liabilities
2.6
2.6
3.2
4.0
Payments are expected to continue for periods of 1 to 45 years (2023: 1 to 46 years). There
is not considered to be any significant uncertainty regarding the amount and timing of
these cash flows relating to onerous lease and dilapidation provisions.
24 OTHER NON-CURRENT LIABILITIES
2024 2023
£m £m
Other liabilities
8.3
7.1
25 FINANCIAL INSTRUMENTS
Financial instruments by category
Assets
at fair value Assets at
through amortised
profit or loss cost Total
At 28 September 2024 £m £m £m
Assets as per the balance sheet
Derivative financial instruments
0.4
–
0.4
Finance lease receivables (before provision)
–
17.3
17.3
Trade receivables (before provision)
–
12.5
12.5
Other receivables (before provision)
–
4.1
4.1
Other cash deposits
–
1.1
1.1
Cash and cash equivalents
–
44.4
44.4
0.4
79.4
79.8
Liabilities
Derivatives at fair value Other
used for through financial
hedging profit or loss liabilities Total
At 28 September 2024 £m £m £m £m
Liabilities as per the balance sheet
Derivative financial instruments
7.6
51.8
–
59.4
Borrowings
–
–
1,302.9
1,302.9
Trade payables
–
–
65.0
65.0
Other payables
–
–
13.2
13.2
7.6
51.8
1,381.1
1,440.5
Assets
at fair value Assets at
through amortised
profit or loss cost Total
At 30 September 2023 £m £m £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
Additional information
121Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
25 FINANCIAL INSTRUMENTS CONTINUED
Liabilities
Derivatives at fair value Other
used for through financial
hedging profit or loss liabilities Total
At 30 September 2023 £m £m £m £m
Liabilities as per the balance sheet
Derivative financial instruments
5.4
32.0
–
3 7. 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
Fair values of financial instruments
The only financial instruments which the Group holds at fair value are derivative financial
instruments, which are classified as at fair value through profit or loss or derivatives 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:
2024
Level 1 Level 2 Level 3 Total
Assets as per the balance sheet £m £m £m £m
Derivative financial instruments
–
0.4
–
0.4
2024
Level 1 Level 2 Level 3 Total
Liabilities as per the balance sheet £m £m £m £m
Derivative financial instruments
–
59.4
–
59.4
2023
Level 1 Level 2 Level 3 Total
Assets as per the balance sheet £m £m £m £m
Derivative financial instruments
–
3.8
–
3.8
2023
Level 1 Level 2 Level 3 Total
Liabilities as per the balance sheet £m £m £m £m
Derivative financial instruments
–
37. 4
–
3 7. 4
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 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.
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including interest
rate 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 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.
Financial statementsStrategic report Governance Additional information
122 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
25 FINANCIAL INSTRUMENTS CONTINUED
Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes
in 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 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 28 September 2024,
with all other variables held constant, the post-tax loss for the period would have been
£0.4 million (2023: £0.6 million) higher/lower 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 28 September 2024 was 6.0% (2023: 6.0%).
2024 2023
Interest rate swaps designated as part of a hedging relationship £m £m
Carrying amount of hedging instruments (included within
derivative financial instruments)
7.6
5.4
Change in fair value of hedging instruments used as the basis
for recognising hedge ineffectiveness in the period
3.0
3.6
Nominal amount of hedging instruments
107. 8
119. 6
Change in fair value of hedged items used as the basis
for recognising hedge ineffectiveness in the period
(2.8)
(3.0)
Hedging reserve balance in respect of continuing hedges
(3.4)
(1.0)
Hedging reserve balance in respect of discontinued hedges
(37. 4)
(43.4)
Hedging losses recognised in other comprehensive income
(2.8)
(3.0)
Hedge ineffectiveness losses recognised in profit or loss
(0.2)
(0.6)
Amount reclassified from the hedging reserve to profit or loss
in respect of continuing hedges
(0.4)
2.1
Amount reclassified from the hedging reserve to profit or loss
in respect of discontinued hedges
8.0
9.3
2024 2023
Hedging reserve £m £m
At beginning of the period
(44.4)
(50.7)
Hedging losses recognised in other comprehensive income
(2.8)
(3.0)
Amount reclassified from the hedging reserve to profit or loss
7.6
11. 4
Deferred tax on hedging reserve movements
(1.2)
(2.1)
At end of the period
(40.8)
(44.4)
Interest rate swaps not designated as part of a hedging relationship
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 Group also has an interest rate swap of £60.0 million which fixes the interest rate
payable on the Group’s bank borrowings.
Additional information
123Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
25 FINANCIAL INSTRUMENTS CONTINUED
The interest rate risk profile, after taking account of derivative financial instruments,
is as follows:
2024
2023
Floating rate Fixed rate Floating rate Fixed rate
financial financial financial financial
liabilities liabilities Total liabilities liabilities Total
£m £m £m £m £m £m
Borrowings
361.7
971.1
1,332.8
480.7
1,14
4.3
1,625.0
The weighted average interest rate of the fixed rate borrowings was 6.0% (2023: 5.1%) and
the weighted average period for which the rate is fixed was 14 years (2023: 13 years).
Foreign currency risk
The Group buys 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.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from credit exposure to
customers, including outstanding receivables and committed transactions. If customers
are 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
2024 2023 2024 2023
£m £m £m £m
Finance lease receivables
Net investment in the lease
17. 3
18.8
1.4
2.1
17. 3
18.8
1.4
2.1
Trade receivables
Amounts due from current pub tenants
1.8
1.7
0.1
0.2
Miscellaneous trade receivables
10.7
11. 0
0.2
0.3
12.5
12.7
0.3
0.5
Other receivables
Amounts due from previous pub tenants
0.6
0.9
0.6
0.9
Amounts due from other property tenants
0.2
0.5
0.1
0.1
Miscellaneous other receivables
3.3
3.4
0.1
0.1
4.1
4.8
0.8
1.1
33.9
36.3
2.5
3.7
Expected credit losses have been calculated as follows:
Gross
Loss allowance
2024 2023 2024 2023
£m £m £m £m
12-month expected credit losses
3.3
3.4
0.1
0.1
Lifetime expected credit losses for trade
and lease receivables
30.6
32.9
2.4
3.6
33.9
36.3
2.5
3.7
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.
Financial statementsStrategic report Governance Additional information
124 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
25 FINANCIAL INSTRUMENTS CONTINUED
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 the scope of IFRS 15 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. 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 these receivables.
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:
2024 2023
Finance lease receivables £m £m
At beginning of the period
2.1
3.8
Net decrease in loss allowance recognised in profit or loss
(0.5)
(1.1)
Amounts written off as uncollectible
(0.2)
(0.6)
At end of the period
1.4
2.1
2024 2023
Trade receivables £m £m
At beginning of the period
0.5
0.7
Net decrease in loss allowance recognised in profit or loss
(0.1)
(0.1)
Amounts written off as uncollectible
(0.1)
(0.1)
At end of the period
0.3
0.5
12-month expected Lifetime expected
credit losses credit losses
2024 2023 2024 2023
Other receivables £m £m £m £m
At beginning of the period
0.1
0.1
1.0
1.2
Net increase in loss allowance recognised
in profit or loss
–
–
–
0.2
Amounts written off as uncollectible
–
–
(0.3)
(0.4)
At end of the period
0.1
0.1
0.7
1.0
The Group has no significant concentration of credit risk in respect of its customers. The
maximum exposure to credit risk at the reporting date is the carrying value of each class
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 monitors 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 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.
Additional information
125Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
25 FINANCIAL INSTRUMENTS CONTINUED
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.
Less than Between Between Over
1 year 1 and 2 years 2 and 5 years 5 years Total
At 28 September 2024 £m £m £m £m £m
Borrowings
145.4
163.3
374.0
1,722.4
2,405.1
Derivative financial instruments
1.4
5.1
17.1
76.1
99.7
Trade payables
65.0
–
–
–
65.0
Other payables
13.2
–
–
–
13.2
225.0
168.4
391.1
1,798.5
2,583.0
Less than Between Between Over
1 year 1 and 2 years 2 and 5 years 5 years Total
At 30 September 2023 £m £m £m £m £m
Borrowings
179.2
405.8
379.6
1,835.0
2,79
9.6
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
3 87. 0
1,910.0
2,953.8
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 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.
(c) Long Term Incentive Plan (LTIP). Under this scheme nil cost options are granted that
will only 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, operating margin and relative total shareholder return are
met. LTIP options are exercisable no later than the tenth anniversary of the date of
grant.
The tables below summarise the outstanding share options:
Weighted average
Number of shares exercise price
2024 2023 2024 2023
SAYE: m m p p
Outstanding at beginning of the period
12.7
7. 9
29.6
46.7
Granted
4.2
10.4
29.0
26.0
Expired
(3.4)
(5.6)
31.2
46.9
Outstanding at end of the period
13.5
12.7
29.0
29.6
Exercisable at end of the period
–
–
–
96.0
Range of exercise prices
26.0p to
26.0p to
44.0p 96.0p
Weighted average remaining
contractual life (years)
2.6
3.2
Weighted average
Number of shares exercise price
2024 2023 2024 2023
Deferred bonus: m m p p
Outstanding at beginning of the period
0.3
0.3
–
–
Exercised
(0.2)
–
–
–
Outstanding at end of the period
0.1
0.3
–
–
Exercisable at end of the period
0.1
–
–
–
Financial statementsStrategic report Governance Additional information
126 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
27 SHARE-BASED PAYMENTS CONTINUED
Weighted average
Number of shares exercise price
2024 2023 2024 2023
LTIP: m m p
Outstanding at beginning of the period
16.9
9.2
– –
Granted
12.9
10.3
– –
Exercised
(0.1)
(0.2)
– –
Expired
(3.0)
(2.4)
– –
Outstanding at end of the period
26.7
16.9
– –
Exercisable at end of the period
–
–
– –
p
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:
2024
2023
Dividend yield %
2.3 to 6.3
1.9 to 4.7
Expected volatility %
38.0 to 42.6
40.4 to 48.1
Risk-free interest rate %
4.1 to 4.3
3.3 to 5.1
Expected life of rights
SAYE
3 years
3 years
Deferred bonus
N/A
N/A
LTIP
3 to 5 years
3 to 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 4.0p
(2023: 6.5p). 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 25.9p (2023: 31.8p).
The weighted average share price for options exercised over the period was 37.5p
(2023: 32.6p). The total charge for the period relating to employee share-based payment
plans was £2.0 million (2023: £0.4 million), all of which related to equity-settled share-based
payment transactions. After tax, the total charge was £1.5 million (2023: £0.3 million).
28 EQUITY SHARE CAPITAL
2024
2023
Number Value Number Value
Allotted, called up and fully paid m £m m £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 (2023: £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.
2024
2023
Number Value Number Value
m £m m £m
Shares held on trust for employee
share schemes
0.4
0.5
0.7
0.8
Treasury shares
26.2
109.7
26.2
10 9. 8
26.6
110.2
26.9
110 . 6
The market value of own shares held is £11.4 million (2023: £8.2 million). Shares held on trust
for employee share schemes represent 0.1% (2023: 0.1%) of issued share capital. Treasury
shares held represent 4.0% (2023: 4.0%) of issued share capital. Dividends on own shares
have 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.
Additional information
127Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
30 NET DEBT
2024 2023
Analysis of net debt £m £m
Cash and cash equivalents
Cash at bank and in hand
44.4
26.5
44.4
26.5
Financial assets
Other cash deposits
1.1
3.1
1.1
3.1
Debt due within one year
Bank borrowings
2.5
2.6
Securitised debt
(43.5)
(41.1)
Lease liabilities
(17.7 )
(17. 8 )
Other lease related borrowings
0.5
0.4
Other borrowings
–
(10.0)
(58.2)
(65.9)
Debt due after one year
Bank borrowings
(33.0)
(228.2)
Securitised debt
(516.7)
(560.2)
Lease liabilities
(356.0)
(362.6)
Other lease related borrowings
(338.9)
(338.4)
Other borrowings
–
(40.0)
Preference shares
(0.1)
(0.1)
(1,244.7)
(1,529. 5)
Net debt
(1, 257.4)
(1,565.8)
Other cash deposits and cash and cash equivalents include deposits securing letters
of credit for reinsurance contracts (note 33). Included within cash and cash equivalents
is an amount of £5.5 million (2023: £5.6 million) relating to collateral held in the form of cash
deposits. These amounts are both considered to 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).
2024 2023
Reconciliation of net cash flow to movement in net debt £m £m
Increase/(decrease) in cash and cash equivalents in the period
17.9
(1.2)
(Decrease)/increase in other cash deposits
(2.0)
0.1
Cash outflow from movement in debt
293.9
35.5
Net cash inflow
309.8
34.4
Non-cash movements and deferred issue costs
(1.4)
(6.2)
Movement in net debt in the period
308.4
28.2
Net debt at beginning of the period
(1,565.8)
(1,594.0)
Net debt at end of the period
(1,257. 4)
(1,565.8)
2024 2023
£m £m
Net debt excluding lease liabilities
(883.7)
(1,185.4)
Lease liabilities
(373.7)
(380.4)
Net debt
(1, 257.4)
(1,565.8)
Changes in liabilities arising from financing activities are as follows:
2024
2023
Derivative Total Derivative Total
financial financing financial financing
Borrowings instruments liabilities Borrowings instruments liabilities
£m £m £m £m £m £m
At beginning of the
period
(1,595.4)
(33.6)
(1,629.0)
(1,624.7)
(20.4)
(1,6 45.1)
Cash flow
293.9
(4.2)
289.7
35.5
(0.1)
35.4
Changes in fair value
–
(21.2)
(21.2)
–
(13.1)
(13.1)
Other changes
(1.4)
–
(1.4)
(6.2)
–
(6.2)
At end of the period
(1,302.9)
(59.0)
(1,361.9)
(1,595.4)
(33.6)
(1,62
9.0)
Financial statementsStrategic report Governance Additional information
128 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
31 WORKING CAPITAL AND NON-CASH MOVEMENTS
2024 2023
Working capital movement £m £m
Decrease/(increase) in inventories
0.5
(2.3)
Decrease in trade and other receivables
0.8
4.7
Increase/(decrease) in trade and other payables
6.9
(31.4)
8.2
(2 9.0)
2024 2023
Non-cash movements £m £m
Movements in respect of property, plant and equipment,
assets held for sale and intangible assets
(2.6)
23.0
Impairment of associates
8.0
–
Loss on disposal of associates
11.9
–
Loss/(income) from associates
16.1
(9.9)
Non-cash movements in respect of leases
(2.7)
(1.2)
Share-based payments
2.0
0.4
32.7
12.3
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 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 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.
2024 2023
Depreciation charge for right-of-use assets £m £m
Leasehold land and buildings
11.3
11. 6
Fixtures, fittings, tools and equipment
0.2
0.2
11.5
11. 8
2024 2023
Carrying amount of right-of-use assets £m £m
Effective freehold land and buildings
118.4
110 . 4
Leasehold land and buildings
238.6
245.6
Fixtures, fittings, tools and equipment
0.1
0.6
357.1
356.6
2024 2023
£m £m
Interest expense on lease liabilities
19.2
19. 3
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
Variable lease payments
0.2
0.2
Income from subleasing right-of-use assets
1.1
1.3
Total cash outflow for leases
30.2
22.5
Additions to right-of-use assets
7.7
7. 0
The table below analyses the Group’s lease liabilities into relevant maturity groupings
based 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.
2024 2023
£m £m
Less than one year
36.5
36.8
Between one and two years
29.2
2 9.0
Between two and five years
86.2
86.5
Over five years
544.5
562.1
696.4
714.4
Additional information
129Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
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:
2024 2023
£m £m
Finance income on the net investment in the lease
0.8
0.9
Lease income for operating leases
8.0
9.6
The maturity analysis of the undiscounted lease payments to be received for finance leases
is as follows:
2024 2023
Finance leases £m £m
Within one year
3.7
4.7
In more than one year but less than two years
2.3
2.3
In more than two years but less than three years
2.1
2.1
In more than three years but less than four years
2.1
2.0
In more than four years but less than five years
2.1
2.0
In more than five years
10.3
11. 3
22.6
24.4
Unearned finance income
(5.3)
(5.6)
Net investment in the lease
17. 3
18.8
The maturity analysis of the undiscounted lease payments to be received for operating
leases is as follows:
2024 2023
Operating leases £m £m
Within one year
5.8
7. 8
In more than one year but less than two years
4.7
5.9
In more than two years but less than three years
3.6
4.6
In more than three years but less than four years
3.1
3.1
In more than four years but less than five years
2.2
2.3
In more than five years
8.4
9.3
27.8
33.0
33 CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS
The Group has issued letters of credit totalling £3.7 million (2023: £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.
34 ORDINARY DIVIDENDS ON EQUITY SHARES
No dividends were paid during the current or prior period. A final dividend for 2024 has not
been proposed.
Financial statementsStrategic report Governance Additional information
130 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
Note
28 September
2024
£m
30 September
2023
£m
Fixed assets
Tangible assets 5 200.5 194.0
Investments 6 266.2 264.2
466.7 458.2
Current assets
Debtors
Amounts falling due within one year 7 256.6 2 5 7. 3
Amounts falling due after more than one year 7 747. 6 668.3
Cash at bank 2.2 1.9
1,006.4 9 2 7. 5
Creditors Amounts falling due within one year 8 (667.3) (550.4)
Net current assets 339.1 37 7.1
Total assets less current liabilities 805.8 835.3
Creditors Amounts falling due after more than one year 8 (114 .5) (155.5)
Provisions for liabilities 9 (5.6) (5.2)
Net assets 685.7 674.6
Capital and reserves
Equity share capital 13 48.7 48.7
Share premium account 14 334.0 334.0
Revaluation reserve 14 25.0 21.6
Capital redemption reserve 14 6.8 6.8
Own shares 14 (110. 2) (110. 6)
Profit and loss reserves 381.4 374.1
Total equity 685.7 674.6
The profit of the Company for the 52 weeks ended 28 September 2024 was £5.5 million (2023: loss of £1.6 million).
The financial statements were approved by the Board and authorised for issue on 3 December 2024 and are signed on its behalf by:
JUSTIN PLATT HAYLEIGH LUPINO
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
3 December 2024 3 December 2024
Company registration number: 31461
Additional information
131Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
As at 28 September 2024
COMPANY BALANCE SHEET
Equity
share
capital
£m
Share
premium
account
£m
Revaluation
reserve
£m
Capital
redemption
reserve
£m
Own
shares
£m
Profit
and loss
reserves
£m
Total
equity
£m
At 2 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
Profit for the period – – – – – 5.5 5.5
Revaluation of properties – – 4.2 – – – 4.2
Deferred tax on properties – – (0.6) – – – (0.6)
Total comprehensive income – – 3.6 – – 5.5 9.1
Share-based payments – – – – – 2.0 2.0
Sale of own shares – – – – 0.4 (0.4) –
Transfer to profit and loss reserves – – (0.2) – – 0.2 –
Total transactions with owners – – (0.2) – 0.4 1.8 2.0
At 28 September 2024 48.7 334.0 25.0 6.8 (110. 2) 381.4 685.7
Financial statementsStrategic report Governance Additional information
132 Marston’s PLC Annual Report and Accounts 2024
COMPANY STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 28 September 2024
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.
Additional information
133Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES
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.
Residual values and useful lives are reviewed and adjusted if appropriate at each balance
sheet date. The Company’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 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
for determined multiples and unobservable market data for fair maintainable trade.
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.
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 statementsStrategic report Governance Additional information
134 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
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 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.
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.
Additional information
135Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
1 ACCOUNTING POLICIES CONTINUED
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,
wherethe Directors have considered it unlikely that repayment will arise in the short-term,
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.
4 EMPLOYEES
The average monthly number of people employed by the Company during the period
wasnil (2023: 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 1 October 2023 184.1 2 7. 2 1.2 212.5
Additions 1.3 0.4 – 1.7
Revaluation 7. 3 – – 7. 3
Disposals (0.3) (2.7) – (3.0)
At 28 September 2024 192.4 24.9 1.2 218.5
Depreciation
At 1 October 2023 – 17. 8 0.7 18.5
Charge for the period – 0.6 0.2 0.8
Impairment – 0.6 – 0.6
Disposals – (1.9) – (1.9)
At 28 September 2024 – 17.1 0.9 18.0
Net book amount at 30 September 2023 184.1 9. 4 0.5 194.0
Net book amount at 28 September 2024 192.4 7.8 0.3 200.5
Financial statementsStrategic report Governance Additional information
136 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
5 TANGIBLE FIXED ASSETS CONTINUED
The net book amount of land and buildings is split as follows:
2024
£m
2023
£m
Freehold land and buildings 141.8 135.1
Leasehold land and buildings with a term greater than 100 years
at acquisition/commencement 50.6 49. 0
Leasehold land and buildings with a term less than 100 years
at acquisition/commencement 7. 8 9.4
200.2 193.5
If the effective freehold land and buildings had not been revalued, the historical cost net
book amount would be £159.5 million (2023: £155.2 million).
Capital expenditure authorised and committed at the period end but not provided for
inthe financial statements was £0.2 million (2023: £nil).
The net book amount of effective freehold land and buildings held under finance leases at
28 September 2024 was £18.1 million (2023: £16.5 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 £90.4 million (2023: £86.5 million).
The net book amount of fixtures, fittings, plant and equipment held under finance leases
was £nil (2023: £0.5 million).
The Company has charged effective freehold land and buildings with a value of
£4.6million (2023: £4.2 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 30 June 2024 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.
2024
£m
2023
£m
Profit and loss account:
Impairment (5.2) (16.2)
Reversal of past impairment 7.7 7. 0
2.5 (9.2)
Revaluation reserve:
Unrealised revaluation surplus 7.5 5.1
Reversal of past revaluation surplus (3.3) (9.3)
4.2 (4.2)
Net increase/(decrease) in shareholders’ equity/tangible fixed assets 6.7 (13.4)
6 FIXED ASSET INVESTMENTS
Subsidiary
undertakings
£m
Cost
At 1 October 2023 264.2
Capital contribution in respect of equity-settled share-based payments 2.0
At 28 September 2024 266.2
Net book amount at 30 September 2023 264.2
Net book amount at 28 September 2024 266.2
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.
These financial statements are separate company financial statements for Marston’s PLC.
Additional information
137Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
6 FIXED ASSET INVESTMENTS CONTINUED
The Company had the following subsidiary undertakings at 28 September 2024:
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%
The registered office of all of the above 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.
7 DEBTORS
Amounts falling due within one year
2024
£m
2023
£m
Amounts owed by Group undertakings 252.3 252.3
Derivative financial instruments – 1.1
Prepayments and accrued income – 0.1
Other debtors 4.3 3.8
256.6 2 5 7. 3
Amounts falling due after more than one year
2024
£m
2023
£m
12.5% subordinated loan owed by Group undertaking 747.6 668.3
747.6 668.3
The gross contractual amount outstanding in respect of the subordinated loan was
£1,901.0million (2023: £1,687.2 million) and the impact of discounting the expected cash
flows at 12.5% was £1,153.4 million (2023: £1,018.9 million).
Financial statementsStrategic report Governance Additional information
138 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
8 CREDITORS
Amounts falling due within one year
2024
£m
2023
£m
Amounts owed to Group undertakings 576.8 504.0
Finance leases 0.6 0.9
Other lease related borrowings (0.1) (0.1)
Corporation tax 80.9 34.5
Derivative financial instruments – 1.1
Accruals and deferred income 9.1 10.0
667.3 550.4
Amounts falling due after more than one year
2024
£m
2023
£m
Finance leases 18.7 19.0
Other lease related borrowings 88.7 88.6
Other borrowings – 40.0
Preference shares 0.1 0.1
Accruals and deferred income 7. 0 7. 8
114. 5 155.5
Included within amounts falling due within one year, corporation tax, are amounts payable
to other group companies in respect of corporation tax.
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 £106.5 million (2023: £106.8 million). Debts
of£0.1 million (2023: £0.1 million) were repayable otherwise than by instalments after more
than five years from the balance sheet date.
9 PROVISIONS FOR LIABILITIES
Deferred
tax
£m
Property
leases
£m
Total
£m
At 1 October 2023 1.3 3.9 5.2
Provided in the period – 0.8 0.8
Released in the period – (0.4) (0.4)
Utilised in the period – (0.9) (0.9)
Unwind of discount – 0.1 0.1
Adjustment for change in discount rate – 0.1 0.1
Charged to profit or loss 0.1 – 0.1
Charged to other comprehensive income 0.6 – 0.6
At 28 September 2024 2.0 3.6 5.6
Payments are expected to continue in respect of these property leases for periods of
1 to 20 years (2023: 1 to 21 years). There is not considered to be any significant uncertainty
regarding the amount and timing of these cash flows relating to onerous lease and
dilapidation provisions.
Deferred tax
The amount provided in respect of deferred tax is as follows:
2024
£m
2023
£m
Excess of capital allowances over accumulated depreciation 6.5 6.4
Property related items 0.3 –
Other (4.8) (5.1)
2.0 1.3
A deferred tax asset of £7.5 million (2023: £8.0 million) arising on capital losses has not been
recognised due to uncertainty over its future recoverability.
Additional information
139Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
For the 52 weeks ended 28 September 2024
NOTES continued
10 FINANCIAL INSTRUMENTS
Carrying amount of financial assets
2024
£m
2023
£m
Measured at fair value through profit or loss – 1.1
Carrying amount of financial liabilities
2024
£m
2023
£m
Measured at fair value through profit or loss – 1.1
The only financial instruments that the Company held at fair value were interest rate swaps.
The fair values of the Company’s interest rate swaps were obtained using a market
approach and reflected 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 utilised valuations from counterparties who used a variety of assumptions based
on market conditions existing at each balance sheet date.
11 OPERATING LEASE COMMITMENTS
At 28 September 2024 the Company had outstanding commitments for future minimum
lease payments under non-cancellable operating leases as follows:
2024
£m
2023
£m
Within one year 6.5 7.0
In more than one year but less than five years 20.5 20.9
In more than five years 32.2 38.1
59.2 66.0
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:
2024
£m
2023
£m
Within one year 1.7 2.0
In more than one year but less than five years 5.4 5.4
In more than five years 26.9 28.3
34.0 35.7
Future finance charges (14.7) (15.8)
Present value of finance lease obligations 19.3 19.9
13 EQUITY SHARE CAPITAL
2024 2023
Allotted, called up and fully paid
Number
m
Value
£m
Number
m
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.
Financial statementsStrategic report Governance Additional information
140 Marston’s PLC Annual Report and Accounts 2024
For the 52 weeks ended 28 September 2024
NOTES continued
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, 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 facilitate 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.
Loan to value
Loan to value is presented both for the Group’s securitised debt and for the Group’s net
debt excluding lease liabilities. The loan to value ratio is the percentage of the amount
borrowed against the value of the Group’s assets.
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 also presented excluding lease
liabilities. The net debt to EBITDA leverage ratio is presented both inclusive and exclusive of
lease liabilities and the associated EBITDA impact.
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.
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.
Additional information
141Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
ADDITIONAL INFORMATION
ALTERNATIVE PERFORMANCE MEASURES
Outlet sales
Outlet sales represents all revenue that is generated at the Group’s 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 it is a generally accepted profit measure.
Recurring FCF
Recurring FCF represents NCF adjusted for the sale of property, plant and equipment and
assets held for sale, disposal proceeds from the sale of the Group’s investment in Carlsberg
Marston’s Limited, and dividends received from associates.
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 from contracts with customers generated from our
tenanted and leased pubs.
Year
The current year refers to the 52-week period ended 28 September 2024. The prior year
refers to the 52-week period ended 30 September 2023.
Reconciliation of APMs to Marston’s strategy
APM
Closest equivalent
statutory measure
Link to value driver
for growth
Link to key
sustainability targets
CAPEX Purchase of property,
plant and equipment
and intangible assets
Capex to create
differentiated pub
formats
To promote energy
from renewable or
self-generated sources
NCF
Recurring FCF
Net increase/
(decrease) in
cashand cash
equivalents
Leveraging Marston’s
synergies in targeted
acquisitions
To achieve Net Zero
by 2024
Maintain FTSE4Good
certification
LFL sales Revenue Execute a market leading
pub operating model
Digital Transformation
All of our pubs to be
5* EHO
NAV per share Net assets Capex to create
differentiated pub formats
To achieve Net Zero
by 2024
Net debt
Net debt to EBITDA
leverage
Loan to value
Borrowings Capex to create
differentiated pub formats
Execute a market leading
pub operating model
To achieve Net Zero
by 2024
Underlying operating
margin
Operating profit Execute a market leading
pub operating model
Expansion of managed
&partnership models
50% reduction in
foodwaste by 2030
To reduce the volume
of water we consume
across our estate every
year
Underlying EBITDA Profit/(loss) before
tax
142 Marston’s PLC Annual Report and Accounts 2024
Additional informationStrategic report Financial statementsGovernance
ADDITIONAL INFORMATION continued
ALTERNATIVE PERFORMANCE MEASURES
Reconciliation of APMs to statutory results
Loan to value
Statutory reference
2024
£m
2023
£m
Securitised pubs and lodges 1,145.9 1,157.1
Non-securitised effective freehold pubs
andlodges 618.5 595.6
1,764.4 1,752.7
Non-securitised leasehold pubs and lodges 282.8 2 87. 3
Other non-core properties and
administrationassets 21.8 24.8
Property, plant and equipment total Note 11 2,069.0 2,064.8
Securitised debt due within one year Note 30 43.5 41.1
Securitised debt due after one year Note 30 516.7 560.2
Other borrowings due within one year Note 30 – 10.0
560.2 611. 3
Loan to value of securitised debt 49% 53%
Net debt excluding lease liabilities
at end of the period Note 30 883.7 1,185.4
Loan to value of debt excluding
leaseliabilities 50% 68%
LFL sales
Statutory reference
52 weeks to
28 September
2024
£m
52 weeks to
30 September
2023
£m
LFL
%
LFL retail sales 813.7 776.4 4.8
Non-LFL retail sales 21.4 2 9.7
Retail sales 835.1 806.1
Non-EPOS outlet sales 29.5 26.7
Outlet sales Note 3 864.6 832.8
6 weeks to
9 November
2024
£m
6 weeks to
11 N ove m b e r
2023
£m
LFL
%
LFL retail sales 89.2 85.9 3.9
Non-LFL retail sales 0.9 0.1
Retail sales 90.1 86.0
NAV per share
Statutory reference 2024 2023
Net assets (£m) Balance sheet 654.8 640.1
Number of shares outstanding Note 28, 29 633.8 633.5
NAV per share 1.03 1.01
NCF – including reconciliation to recurring FCF
Statutory reference
2024
£m
2023
£m
Increase/(decrease) in cash and
cashequivalents Note 30 17.9 (1.2)
(Decrease)/increase in other cash deposits Note 30 (2.0) 0.1
Cash outflow from movement in debt Note 30 293.9 35.5
Net cash flow 309.8 34.4
Sale of property, plant and equipment
andassets held for sale Cash flow statement (46.9) (51.3)
Disposal of associate Cash flow statement (205.5) –
Dividends from associates Cash flow statement (13.8) (21.6)
Recurring FCF 43.6 (38.5)
Additional information
143Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
ADDITIONAL INFORMATION continued
ALTERNATIVE PERFORMANCE MEASURES
Net debt
Statutory reference
2024
£m
2023
£m
Increase/(decrease) in cash and cash
equivalents Note 30 17.9 (1.2)
(Decrease)/increase in other cash deposits Note 30 (2.0) 0.1
Cash outflow from movement in debt
excluding lease liabilities 285.5 30.4
Net cash inflow 301.4 2 9.3
Non-cash movements and deferred
issuecosts 0.3 1.5
Movement in net debt excluding lease
liabilities in the period 301.7 30.8
Net debt excluding lease liabilities
atbeginning of the period Note 30 (1,185.4) (1,216.2)
Net debt excluding lease liabilities
at end of the period Note 30 (883.7) (1,185.4)
Underlying EBITDA (from continuing operations)
Statutory reference
2024
£m
2023
£m
Operating profit Income statement 151.7 90.2
Non-underlying operating items Note 4 (4.5) 34.6
Depreciation and amortisation Cash flow statement 45.3 45.5
Underlying EBITDA 192.5 170. 3
Revenue Income statement 898.6 872.3
Underlying EBITDA margin 21.4% 19.5%
Statutory reference
2024
£m
2023
£m
Underlying EBITDA under IFRS 16 192.5 170.3
Net rental charge (21.7) (21.8)
Underlying EBITDA pre IFRS 16 170.8 148.5
Net debt including lease liabilities
at end of the period Note 30 1,2 57. 4 1,565.8
Net debt to EBITDA leverage including
leaseliabilities 6.5 9.2
Net debt excluding lease liabilities
at end of the period Note 30 883.7 1,185.4
Net debt to EBITDA leverage excluding
lease liabilities 5.2 8.0
Underlying operating margin (from continuing operations)
Statutory reference
2024
£m
2023
£m
Operating profit Income statement 151.7 90.2
Non-underlying operating items Note 4 (4.5) 34.6
Underlying operating profit
Income statement
147.2 124.8
Revenue 898.6 872.3
Underlying operating margin 16.4% 14.3%
26 weeks to
30 March
2024
£m
26 weeks to
28 September
2024
£m
52 weeks to
28 September
2024
£m
Operating profit 51.8 99.9 151.7
Non-underlying operating items 0.9 (5.4) (4.5)
Underlying operating profit 52.7 94.5 147.2
Revenue 428.1 470.5 898.6
Underlying operating margin 12.3% 20.1% 16.4%
144 Marston’s PLC Annual Report and Accounts 2024
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ADDITIONAL INFORMATION continued
ALTERNATIVE PERFORMANCE MEASURES
Annual General Meeting (AGM)
The Company’s AGM will be held at 10:00am on 21 January 2025 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. 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 onscreen instruction.
Financial calendar
AGM and Interim Management Statement 21 January 2025
Half-year results May 2025
Full-year results December 2025
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
1
By post: Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA
Dividend payments
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.
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 our shareholders. Our 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.
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 the UK, please ensure the country code is used.
Additional information
145Marston’s PLC Annual Report and Accounts 2024
Strategic report Financial statementsGovernance
ADDITIONAL INFORMATION continued
INFORMATION FOR SHAREHOLDERS
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/dealing or 0345 603 7037.
1
Ordinary Shares
Range of shareholding
Balance ranges
Total no.
holdings % of holders
Total no.
shares
% issued
capital
1–1,000 3,295 47. 6 0 % 1,290,258 0.19%
1,001–10,000 2,723 39. 3 3% 10,009,064 1.52%
10,001–100,000 681 9. 8 4% 18,332,786 2.78%
100,001–1,000,000 138 1.99% 47, 4 9 8 , 867 7.19 %
1,000,001–999,999,999 86 1.24% 583,231,218 88.32%
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
Register or you are told they are out of date.
• 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.
1. Lines are open Monday to Friday, 8:00am to 4:30pm for dealing and until 5:30pm for enquiries (UK time),
excluding English public holidays.
Analysis of shareholder register
by investor type
Private client fund managers 28.43%
Private investors 8.25%
Institutional investors 63.32%
146 Marston’s PLC Annual Report and Accounts 2024
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ADDITIONAL INFORMATION continued
INFORMATION FOR SHAREHOLDERS
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
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 Bunhill Row, London EC1Y 8YY
Additional information
147Marston’s PLC Annual Report and Accounts 2024
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ADDITIONAL INFORMATION continued
INFORMATION FOR SHAREHOLDERS
2022 2023 2024
7.8
8.2
8.4
Your Voice engagement score of 8 or more
2022 2023 2024
7.0
8.6
4.1
Spend per head vs LY (%)
2022 2023 2024
3.9
4.0
4.1
To remain in the FTSE4Good index
2022 2023
2024
55.5
45.9
103.6
Free cash flow (£m)
We’ve made changes to our KPIs during the reporting year, to align with
ournew strategy. The following KPIs will not be reported on from FY2025.
2022 2023 2024
3rd
To be No.1 company on Reputation.com
2nd
1st
AGM Annual General Meeting
bps Basis points – unit of measurement used to express percentage change
CAGR Compound annual growth rate
CAPEX Capital expenditure
CMBC Carlsberg Marston’s Brewing Company
CMD Capital Markets Day
D&I Diversity and inclusion
EBITDA Earnings before interest, taxes, depreciation, and amortisation
EHO Food hygiene rating issued by Food Standards Agency
EPC Energy performance certificate
ESG Environmental, Social and Governance
EV Electric vehicle
FCF Free cash flow
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
GHG Greenhouse gas
H1 The first half of the financial year
H2 The second half of the financial year
IFRS International Financial Reporting Standards
LFL Like-for-like
LTIP Long-Term Incentive Plan
M&A Mergers and acquisitions
NCF Net cash flow
NLW National Living Wage
NMW National Minimum Wage
M&A Mergers and acquisitions
PBT Profit before tax
PCA Pubs Code Adjudicator
Pub Support Centre Marston’s head office
ROIC Return on investment capital – 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 – interest rate benchmark which
reflects the average of interest rates which banks pay to borrow sterling
overnight
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
148 Marston’s PLC Annual Report and Accounts 2024
Additional informationStrategic report Financial statementsGovernance
ADDITIONAL INFORMATION continued
HISTORICAL KPIs & GLOSSARY
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Marston’s PLC
St Johns House, St Johns Square,
Wolverhampton WV2 4BH
Telephone 01902 907250
Registered No. 31461