3rd Aug 2009 10:40
Greene King plc
Report and accounts and AGM circular
Two copies of the annual report and accounts for the year ended 3 May 2009 and of the circular convening the 2009 annual general meeting (AGM) have been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:
The Financial Services Authority
25 North ColonnadeCanary Wharf
London E14 5HS
The report and accounts and the AGM circular will also be available on the company's website, www.greeneking.co.uk.
Lindsay Keswick
Company Secretary
3 August 2009
Information required by the Disclosure and Transparency Rule 6.3.5
The principal purpose of this announcement is to notify the submission by the company to the UK Listing Authority of copies of the report and accounts and of the AGM circular. However, the information set out below, which is extracted from the report and accounts, is also included in the announcement for the sole purpose of complying with Disclosure and Transparency Rule 6.3.5 and the requirements it imposes on issues as to how to make annual financial reports public. It should be read in conjunction with the company's preliminary results announcement released on 2 July 2009. This material is not a substitute for reading the full report and accounts. Page numbers and cross- references in the extracted information below refer to page numbers and cross-references in the report and accounts.
Responsibility statement
The following statement is extracted from page 75 of the report and accounts and is not connected to the extracted information presented in this announcement or in the preliminary results announcement.
"Statement of directors' responsibilities in respects of the group financial statements
The directors are responsible for preparing the annual report and the group financial statements, in accordance with applicable United Kingdom law and those International Financial Reporting Standards as adopted by the European Union (EU).
The directors are required to prepare group financial statements for each financial year which present fairly the financial position of the group and the financial performance and cash flows of the group for that period. In preparing those group financial statements the directors are required to:
select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRS's is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the group's financial position and financial performance; and
state that the group has complied with IFRS's, subject to any material departures disclosed and explained in the financial statements.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the group and enable them to ensure that the group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of directors' responsibilities in respects of the parent company financial statements
The directors are responsible for preparing the annual report and the financial statements, in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent; and
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the company financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities."
The names of the directors who have given these statements are:
Rooney Anand (chief executive)
Tim Bridge (chairman)
Justin Adams
John Brady
Ian Bull
Ian Durant
David Elliott
Jonathan Lawson
Norman Murray
Jane Scriven
Principal risks and uncertainties
The following description of the principal risks and uncertainties is extracted from page 20 of the report and accounts.
"This section highlights some of the key risks and uncertainties which affect Greene King but is not intended to be an exhaustive analysis of all risks facing the business.
Greene King has in place clear risk management processes which are designed to identify and evaluate both internal and external risks facing the company, based on the likelihood of their occurrence and the scale of their potential impact on the company. Each risk has an identified owner within the senior management team, responsible for ensuring that any identified risk improvement measures are implemented in a timely manner so that the impact of the risk can be mitigated.
A company-wide risk committee has been established to discuss in detail and monitor the internal controls which have been put in place to ensure that the risks are appropriately managed. Executive oversight is then carried out by the senior management of each business unit, with the executive directors reviewing group risks on a quarterly basis.
The audit committee receives regular reports on the risk management processes in each of the businesses within Greene King. Once a year it reviews the company's top risks, prior to their submission to the board, which retains ultimate responsibility for the company's risk management framework.
Economic risks
The continuing economic downturn and consequential changes in consumer expenditure, tastes and preferences is having an impact on our business. At the same time, costs are increasing and there is uncertainty across the industry about the impact of future inflationary cost increases. Our licensees are also affected by the current economic climate, leading to the risk of more tenant defaults and business failures.
We constantly look to broaden our appeal to customers by delivering quality and value for money, excellent service and up-to-date product offers. We work hard across the group to continue to drive down costs in all areas whilst at the same time fostering mutually beneficial and long-term relationships with our suppliers. We constantly monitor the vital signs of our licensee health, and look to provide our licensees with additional operational and financial support wherever needed and appropriate.
Property values are also impacted by the economic downturn, and with it our ability to improve the average quality of our estate as extensively. However, we continue to successfully complete non-core asset disposals. Within our estate, operational focus is given to poorer performing sites across our estate in order to optimise their profitability in difficult times
We have a diversified business encompassing pubs, restaurants, brewing and drinks distribution, as well as a broad geographic spread.
Regulatory risks
Increasing regulatory requirements or costs in areas such as the smoking ban, alcohol tolerance, licensing, health & safety, corporate manslaughter, taxation and the National Minimum Wage impact many parts of our business. Changes in regulations, including the current debate around the beer tie, may have an impact on our business going forward.
We have a range of policies and procedures in place to ensure compliance with existing regulatory requirements, including in relation to health & safety, fire safety and food safety. Improvements are constantly being introduced in relation to the reporting and monitoring of such risks, backed up by investment where appropriate. Compliance systems are regularly reviewed and updated where appropriate. Training systems are in place to ensure that staff are aware of regulatory requirements which impact on them, and careful planning is undertaken to deal with new regulatory requirements. We offer training and support to our licensees in many of these areas.
We will carefully monitor developments in relation to Business and Enterprise Select Committee's report on the beer tie, and aim to ensure that the full facts are given and fully understood if any inquiry takes place.
Supply chain risks
It is fundamental to the operation of our business that we are able to supply our pubs and restaurants, not only with our own beers, but also with the goods and services of third parties, where we are reliant on a number of a key suppliers, particularly in relation to food and alcohol, and third party distributors.
We work closely with our third-party suppliers, producers and supply chain partners to ensure that our relationships with them are positive and constructive at all times. We also need to minimise the likelihood of failure by or loss of a key supplier and at the same time therefore continuously review our back-up plans to cope with difficulties should such an eventuality rise.
We take a serious approach to risk management in our internal production and distribution activities, always looking to improve and learn from other best-in-class operators. We have an on-going programme of testing our disaster-recovery systems relating to our brewing operations.
Reputational risks
We are a consumer facing business in sectors that hold important positions within the UK's culture and heritage. Issues such as a failure to properly execute our branded models, litigation, regulatory intervention and customer complaints could result in damage to our reputation, a loss of trade and a reduction in our perceived valuation by key stakeholders.
We endeavour to maintain tight controls to protect and enhance our reputation and brand values. We focus constantly on consistency and quality, with staff training, targeted investment programmes and mystery guest visits all designed to help maintain standards, and have systems in place to escalate and respond to relevant incidents.
People risks
This is a people business. Having a strong team is a source of material competitive advantage in our managed and tenanted pubs, our brewing operations and our head office.
We aim for an environment where we can recruit the best people and then through training, development and progression ensure we retain them. Our licensee recruitment and training programmes, and the variety of rental agreements on offer, are designed to attract and retain the best quality licensees.
Financial and control risks
We try to foster an entrepreneurial spirit at Greene King, preferring to empower our employees as opposed to excessively controlling them, but recognise the risks associated with this. We also recognise the financial risks associated with the current economic climate.
We run our operations along divisional lines with lean structures to support them and appropriate operational and financial autonomy on a day-to-day basis. In this environment, we seek to ensure that, for both the financial and management controls that we put in place, the balance is right between such controls being effective and appropriate without being unnecessarily controlling and restrictive.
We are keen to maintain our robust financial position, with our strong and prudent balance sheet and so have rigorous controls in place to monitor compliance with the covenants in our borrowing facilities. Whilst we have no refinancing need in relation to either our bank facility or our securitisation vehicle until 2012, we aim to ensure that we will be in the best possible position to be able to refinance in the lead up to that point. For further detail on our financial risks, shareholders are referred to note 24 of the financial statements and to the information on the company's internal controls contained in the corporate governance section on pages 83 to 87."
Related party transactions
The following description of related party transactions is extracted from page 64 of the report and accounts.
"30 Related party disclosures
No transactions have been entered into with related parties during the period.
Greene King Finance plc is a special purpose entity set up to raise bond finance for the group, and as such is deemed a related party. The results of this entity have been consolidated.
Compensation of key management personnel of the group
|
|
2009 £m |
2008 £m |
|
Short term employee benefits Post - employment pension and medical benefits Share based payments |
2.5 0.3 0.1 |
2.0 0.3 1.1 |
|
Amount of exceptional credit relating to key management share based payment schemes (note 5) |
2.9 (1.3) |
3.4 - |
|
1.6 |
3.4 |
Directors' interests in an employee share incentive plan
Details of the options held by executive members of the board of directors are included in the remuneration report. No options have been granted to the non-executive members of the board under this scheme."
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