MANAGEMENTEnergy and Carbon

2011

Performance and plans Marston’s Overview Our performance Marston’s Inns and Taverns Our plans and commitments

Marston’s recognises that energy usage, costs and the associated carbon dioxide emissions resulting from its business activities are significant. The company is committed to conserving energy, reducing Greenhouse Gas emissions and complying with all environmental regulations whilst reducing cost. Marston’s Plc is a leading independent pub retailing and brewing business in the UK.

Marston’s:

• Is a major employer, currently with 12,936 full and part time employees in England and Wales

• Is a major investor in local communities • Is committed to sustainable, local businesses • Is a major investor in new pubs/restaurants and

the regeneration of existing pubs

bars and restaurants across England and Wales, including around 1,650 tenanted or leased pubs and around 500 managed pubs at the heart of thriving local communities – of which 40 are hotels. Marston’s Inns and Taverns (MIT) is responsible for our managed pubs and restaurants which have transformed over the last few years from drinks led, community based businesses into premier league pub restaurants. The large majority of our MIT sales are associated with a value dining experience and MIT accounts for the greater part of our overall revenues. The key themes for our managed pubs are families, females, food and forty/fifty somethings – the ‘F-Plan’. MIT also operates our ‘Retail Agreement’ franchised pubs.

We are the UK’s largest builder of new pubs and have an ongoing programme to build 25 new food pubs each year. We operate around 2,150 pubs,

Marston’s Pub Company (MPC) operates our leased and tenanted pubs. We seek to attract the best licensees by offering innovative agreements and through sharing of risks and rewards, and we provide training and advice to support these businesses to help them thrive.

We also operate five breweries:

• Banks’s Brewery in Wolverhampton, • Marston’s Brewery in Burton upon Trent, • Jennings Brewery in the Lake District, • Ringwood Brewery in Hampshire • Wychwood Brewery in Oxfordshire

Marston’s Beer Company (MBC) focuses on the production of premium cask and bottled beers with a true local provenance. Our classic and famous brands include Marston’s Pedigree, Old Thumper, Hobgoblin and many more.

Email your thoughts on our energy and environmental performance to: energy@marstons.co.uk

Energy and Carbon�AN OVERVIEWWithin our business, energy is used primarily:

• In the managed pubs and restaurants owned and operated by the company, for heating, lighting, storage of beer and food, and for catering

• In the manufacture and packaging of alcoholic beverages at the five breweries within the Group

• In vehicles used to transport goods to the managed and tenanted pubs within the Marston’s estate, and resulting from the business travel of our employees

This energy usage, and the associated carbon dioxide emissions is directly controlled by the company and initiatives are in place to ensure the use is minimised. Other sources of Greenhouse Gas emissions include refrigerant loss and carbon dioxide from the fermentation of beer. These too are recognised by the company and actively managed.

Further energy usage (and its associated carbon dioxide emissions) is as a consequence of the company’s activities but is controlled by others, including:

• The energy used in the tenanted pubs owned by Marston’s but operated by others.

• Energy used in the production and transport of goods and services used by the company

• Energy associated with the removal and processing of waste and equipment from the pubs and breweries

• The energy used by our customers and employees travelling to and from our locations

Marston’s is fully aware of the issues relating to energy use and carbon dioxide emissions, which include:

• The environmental impact of energy use, including Climate Change

• The high and rising cost of energy, which affects the company’s profitability

• Risks associated with the security of energy supplies within the UK

• The valid concerns of stakeholders about energy use and resources

• The need to comply with regulations

The company is active in all areas of energy and carbon management and aims to be amongst the best performers within the hospitality sector. Actions have been on-going for a number of years to reduce energy use, including:

• A major initiative within our managed house estate to reduce energy use. This year we invested £750k on energy efficiency projects

• Working with the Carbon Trust and other advisory bodies to review the opportunities to improve performance and to implement measures

• Research and development to find new solutions, and trials of new equipment and systems, especially within our managed houses

• Improvements to the monitoring and reporting of energy and carbon performance throughout the company, including the widespread implementation of smart meters in pubs and sub meters in the breweries

• Working with our key suppliers to improve the efficiency of our new build pubs and the equipment we purchase

• Reductions in the number of journeys to our pubs to deliver goods

• Major investments within our breweries to reduce energy use. In the last three years we have invested £2 million in energy efficiency projects

Our energy use andcarbon emissions�The energy use within our direct control is significant. In 2009, our energy costs were around £15 million a year and the associated carbon emissions were around 100,000 tonnes. Electricity and gas usage are dominant. These consumption figures are constantly changing as the numbers of managed pubs is increasing and as we move towards higher food sales and newer facilities. In 2009 we managed around 500 pubs, now the figure is nearer to 800 and our emissions will rise in proportion.

The managed houses, ‘Marston’s Inns and Taverns’ (MIT), account for the majority of the emissions. The breweries (MBC) and transport are secondary, although still a focus of attention.

The figure shows the downward trend in carbon emissions between 2007 and 2009. This is despite a significant increase in food sales in our pubs. We have targeted to achieve further improvements in performance year on year. We have targeted to achieve further improvements in performance year on year. Taking account of increases in food sales, our emissions in 2009 were 10% lower than the previous 2 years. These figures have been verified by external audit for the Carbon Trust Standard.

The carbon emissions from our tenanted estate are estimated at 150,000 tonnes in 2009, around 150% of the overall carbon dioxide emissions that we control. We are working to influence the performance of these pubs and many of the sites are now being transferred into the managed estate. The contribution to our carbon footprint of the goods and services we purchase, our wastes and travel to and from our sites are being investigated.

We have recently introduced more comprehensive monitoring of our gas and electricity use at our sites as part of our on-going energy management activities. Using this data we are able to improve our control of usage.

We have targeted to achieve further improvements in performance year on year. Taking account of increases in food sales, our emissions in 2009 were 10% lower than the previous 2 years

Efficient new pub/restaurantsOur new pubs represent a significant investment, £140 million over three years. We are determined that these will be as energy efficient as possible and have developed designs which include low heat loss and reduced air infiltration, heat recovery, comprehensive monitoring, close control and high efficiency equipment items. We have evaluated the alternative options to improve performance, including heat pumps, solar power, solar heat, wind turbines and further heat recovery and have implemented trial systems to establish facts where these are uncertain. We continue to evaluate new technologies and solutions as they become available and will invest in our new and existing pubs to maintain best practice performance. We purchase equipment from the Government’s Energy Technology List for enhanced capital allowances whenever possible.

Our performance In April 2010, Marston’s plc was awarded the Carbon Trust Standard in recognition of the systems implemented to manage energy use and carbon dioxide emissions and also to reflect the year on year reductions in carbon dioxide emissions over the previous three years. This is a rigorous standard achieved following close scrutiny of the company’s performance. The company is now seeking re-certification for the performance achievements in 2010 and 2011. This standard provides independent evidence that we are implementing best practice and delivering improved performance.

The company seeks now to continually improve performance with on-going initiatives in all our businesses. We have analysed all possible energy efficiency and carbon reduction opportunities and ranked these according to cost, payback, practicality, ease of implementation and robustness of the technology. We are now implementing those solutions that will have maximum impact on the Group’s emissions. Some examples of this year’s initiatives are:

• LED lamps, voltage reduction equipment, new space heating controls and improved insulation at our managed pubs

• Free air cooling systems for the pub beer cellars • Solar thermal, solar PV and heat pump solutions • New methods of energy management within our

existing pubs • Engaging further with our suppliers to ensure

we reduce the carbon footprint of the goods and services we buy

Marston’s Inns and Taverns is responsible for energy used in managed houses. This energy is increasingly used in catering and food storage as our energy for lighting and space heating is reduced through the introduction of more efficient equipment and control systems.

The figure below shows the typical breakdown of energy use in a modern pub based on analysis of our existing estate. Refrigeration includes the cellar cooling, beer chilling and food storage systems. Catering includes the kitchen equipment (fryers, grills, hobs and ovens). With the new lighting and better space heating systems we are implementing, the catering and refrigeration systems will become 75% of our overall energy use.

The use of energy is closely monitored following the installation of ‘smart’ electricity and gas meters.

Energy use is compared with targets and closely managed by the operations teams. All staff within the pubs are trained in energy management and encouraged to take actions to reduce waste. Support is provided from the central energy team.

MIT have already implemented energy efficient carbon reduction solutions and continue to do so. Trials of ‘innovations’ are underway, including heat pumps and solar systems.

Further research is under way to address issues and opportunities for the future, including:

• Heat recovery from the kitchens • Integrated, high efficiency refrigeration systems • Heat recovery from refrigeration • Higher efficiency catering equipment • Low carbon menus • Improved maintenance for energy efficiency • Enhanced monitoring and fault diagnosis • Energy use in the supply chain

The company is building new pubs at a rate of 25 a year, and sees this as an opportunity to increase the energy efficiency of the estate significantly. New builds are designed to be highly energy efficient and include:

• High efficiency lighting • Close control of equipment • High efficiency equipment • Heat recovery • High standards of insulation and air tightness • Voltage reduction equipment • Variable speed ventilation

The Running Hare – a case study�The Running Hare is an example of the impact our energy efficiency initiatives are having on performance.

A package of efficiency measures was implemented during a refurbishment. The figure below shows the electricity use before and after the measures were installed. The pub and its facilities remained unchanged, giving a clear picture of the impacts of energy saving measures.

The savings in electricity usage achieved were over 22%. Similar measures are being implemented during all refurbishment projects – typically 70 a year.

Tenants, breweries The Widerand transport OUR PLANS Environment�Our breweries are also highly committed to energy efficiency. In the last three years we have invested £2 million in energy and carbon management projects: better monitoring and control, improved refrigeration and efficient lighting.

Our tenants are responsible for the energy used in the pubs they operate. However, we aim to support their efforts in energy and carbon management by the transfer of our knowledge and experience. We are currently investigating innovative finance solutions to assist with the implementation of measures and will be offering training and support.

The photograph shows our waste cooking oil collection service. This oil is recycled and converted into biodiesel.

We aim to continue to improve our performance and achieve best practice. Our commitments include:

• Further investment in cost effective energy and carbon reduction projects as part of our refurbishment and new build programmes

• Continuous evaluation of new opportunities • Further engagement with suppliers to provide

lower carbon goods and services • Better management of our assets • Continued transparent reporting of performance

and external audits • Compliance with regulations and standards

The photograph shows our trial air source heat pump system which provides heating and hot water. This has now progressed to a proven solution that is being considered for implementation across the Group.

About the author�

Energy and Carbon Management is one aspect of the wider environmental management programme at Marston’s. We are equally committed to using less raw materials, reuse and recycling.

This document has been prepared by Energy Intelligent Solutions for Marston’s plc and is an independent review of the management of energy and associated carbon dioxide emissions within Marston’s plc. The conclusions are based on work carried out by the author, and colleagues, over a period of three years for Marston’s. This work was supported and approved by the Carbon Trust, an independent not-for-profit organisation in the UK funded by Government which has the aim of supporting the achievement of carbon reductions.

Energy Intelligent Solutions are Carbon Trust accredited consultants and have provided energy efficiency and carbon management advice and solutions to a wide range of clients in the UK and abroad for almost 20 years. The author of the review is David Hart MA (Cantab) CEng MIChemE MInstR.

Marston’s carbon emissions are regulated under the EU Emissions Trading Scheme, a UK Climate Change Agreement and the CRC Energy Efficiency Commitment. Marston’s comply with all aspects of these regulations.

A statement from Ralph Findlay – Chief Executive�“Marston’s PLC is very aware of the importance of energy efficiency and the management of the associated carbon dioxide emissions. The company has made a commitment to improve performance and to comply with all relevant standards and regulations.

Over the past years, this commitment has resulted in significant reductions in energy use and emissions. We have made major investments in our breweries and existing managed pubs and our new pubs include high efficiency systems and equipment.

The company will continue to investigate, develop and implement energy efficient carbon reduction

projects. We will continuously assess our performance both internally and externally, using independent experts on whose recommendations we will act wherever possible.

It is our aim to be amongst the best performers in order to protect the environment as far as possible. We will also pursue this goal as a means of managing costs and improving profitability.

We expect and encourage all our employees and suppliers to contribute to the aim of better energy and carbon management and will provide all the support that is necessary.”

The company welcomes comments and suggestions on all aspects of our energy and environmental performance. Please send any thoughts to energy@marstons.co.uk