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01/02/2007

AGM Trading Update

At the Annual General Meeting to be held at 11am this morning, Roger Carr, Chairman, will make the following comment on the Company's trading for the first 16 weeks to 20 January 2007 of the current financial year:

“I am pleased to announce that our strategy has continued to drive strong market share gains and to deliver good sales growth. In the first 16 weeks like-for-like sales were 4.0% ahead of the comparable period last year, 2.4% on an uninvested basis. Overall trading is in line with the Board’s expectations.

“Mitchells & Butlers’ pubs in residential areas have continued to trade strongly generating like-for-like sales growth of 4.6% for the first 16 weeks. This performance reflects a slow build up to Christmas, a good festive fortnight and a relatively quiet start to the New Year in our pub restaurants. Our local pubs, Sizzling Pub Co and Ember Inns traded well with high food sales growth. The 25% of the business on the high street achieved like-for-like sales growth of 2.7% with our central London pubs performing particularly well.

“Like-for-like food sales continued to grow strongly at 7.2% ahead of last year. Like-for-like drinks sales were up 2.9% reflecting significant market share gains in an on-trade market where beer volumes declined by 4.1% in the quarter to December 2006, due to the increasingly aggressive discounting of alcohol by supermarkets. Retail gross margin was maintained with average prices of food and drink 3% higher than last year. The effective training and deployment of retail staff has delivered further gains in productivity.

“In Scotland (which represents 5% of the estate), like-for-like sales were 0.4% ahead of last year in the first 16 weeks. Like-for-like food sales were up 5% whilst drink sales continued to decline at 2%. Cumulatively since the introduction of the smoking ban last March, like-for-like sales are 1.3% ahead of last year. We are continuing to build on our experience in Scotland in preparation for the ban in England and Wales later this year, developing the reputation of our pubs for serving good food at attractive prices to ensure we are well placed to attract new customers who do not currently use pubs to eat out. In this context, the strong food sales growth in the first 16 weeks of this year is very encouraging.

“We are making excellent progress in our conversion of the former Whitbread pubs (“The Acquired Sites”). We currently have 56 pubs re-opened and operating under our brands and formats with sales uplifts in line with our expectations. We expect to have completed over half of the conversions by the time of our interim results. We are confident that we will continue building the average weekly sales of this estate to at least 30% above the level at which we acquired it.

“Before conversion, our focus is on maximising the short term profit contribution from the pubs. We have removed unprofitable sales promotions which, combined with the greater number of pubs where closure has been notified in preparation for conversion, has had an inevitable impact on sales. As a result, in the first 16 weeks of this year, sales in the 160 pubs still trading pre conversion are running 8.3% below the comparable period last year (pre-acquisition). Costs have been tightly controlled, particularly employment costs, where our forecasting and scheduling disciplines are producing good results. These actions are helping to mitigate the impact on profitability of the declining sales trend. Overall, the acquisition is performing in line with the Board’s expectations. As stated at the time, the acquisition will be marginally dilutive to earnings this year, due to the impact of the conversion programme on margins, particularly in the first half.

“For the Group as a whole, total Retail sales were 12% ahead of last year reflecting the good trading performance and the addition of the Acquired Sites, net of the impact of disposals and the sales disruption from closure.

“As announced in November, the Board is rigorously evaluating the risks and rewards of a REIT structure and will report to shareholders by the Interim Results in May. The review is focussed on whether we can unlock the tax advantages and any value uplift in the short term, whilst being sure that this would deliver sustainable value longer term.

“Given the recent rise in interest rates, it is uncertain whether consumer demand will continue to grow at the current levels. Nevertheless, we are confident of our ability to make further market share gains through our focus on offering value and choice for customers, together with high levels of amenity and service. With further improvements in productivity and purchasing, as well as the opportunity to generate significant sales and profit uplifts from the conversion of the Acquired Sites, the Board remains confident in the future growth prospects of the company.”

Mitchells & Butlers will announce Interim Results for the 28 weeks to 14 April 2007 on 22 May.

For further information please contact:

Investor Relations:


Kate Holligon

0121 498 5092

Media:


Kathryn Holland

0121 498 4526

James Murgatroyd (Finsbury Group)

020 7251 3801

Appendix: Like-for-like sales

16 weeks ended 20/1/2007

Like-for-like
(same outlet)

Uninvested
like-for-like

Residential

4.6%

2.5%

High Street

2.7%

2.1%

Total

4.0%

2.4%

Notes for editors:

  • Like-for-like sales include the sales performance for the comparable period of all managed pubs that were trading in the Mitchells & Butlers estate for the two periods being compared. 85% of the estate (96% excluding the Acquired Sites) is included in this measure.
  • Uninvested like-for-like sales include the sales performance for the comparable period of those managed pubs that have not received expansionary investment of more than £30,000 in the two periods being compared. 78% of the estate (88% excluding the Acquired Sites) is included in this measure.
  • Mitchells & Butlers owns and operates around 2,000 high quality pubs in prime locations nationwide. The Group’s predominantly freehold, managed estate is biased towards large pubs in residential locations. With around 3% of the pubs in the UK, Mitchells & Butlers has 10% of industry sales, and average weekly sales per pub of over three times the industry average.
  • Mitchells & Butlers’ leading portfolio of brands and formats includes Ember Inns, Harvester, Sizzling Pub Co., Toby Carvery, Vintage Inns, All Bar One, O’Neill’s, Nicholson’s and Browns. In addition, Mitchells & Butlers operates a large number of individual city centre and residential pubs.

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