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Interim Results for the 28 weeks ended 9 April 2005

19 May 2005

Mitchells & Butlers plc - Interim Results

(For the 28 weeks ended 9 April 2005)

Financial results

  • Turnover up 5.0% to £864m
  • EBITDA up 5.8% to £202m
  • Operating profit up 4.5% to £140m
  • Profit before tax up 4.9% to £86m
  • Earnings per share up 20.4% to 11.2p
  • Basic earnings per share 11.4p
  • Interim dividend up 12.3% to 3.2p

(1) 2004 comparatives restated for FRS 17
(2) With the exception of basic earnings per share, all results exclude exceptional items

Business highlights

Commenting on the results, Tim Clarke, Chief Executive said:

“We have achieved 4.8% like for like sales growth in the first half, strengthening our position as the UK's leading managed pub operator. This has been driven by our strong brand portfolio and our commitment to customer service, product range and value. We have maintained our margins despite the significant external cost pressures. Our focus on the growth opportunities in food, wine and soft drinks has delivered substantial volume gains.”

  • Sales momentum sustained: same outlet like for like sales up 4.8%*
  • Volume-led sales strategy working well: food volumes up 9%, drink volumes up 3%
  • Focus on service, amenity, range and value: average prices flat on last year
  • Average weekly sales per managed pub £15.9k per week** up 8%
  • Improving returns: 10.4%** post tax cash returns
  • Strong cashflow: £158m net operating cashflow after capex
  • Efficient use of cash resources: half way through £100m share buyback

* 32 weeks to 7 May. Includes Easter in both years
** 12 months to 9 April 2005

Current trading and outlook

Commenting on current trading in the 8 weeks to 7 May and the outlook, Tim Clarke, Chief Executive said:

“Amidst more challenging trading conditions, like for like sales are growing at 5.1% and we are making substantial market share gains. Our focus on operational performance is generating strong cashflow which we will continue to redeploy in the best interest of shareholders, through reinvestment for high returns, value creative acquisitions or return by way of dividend and share buyback.”

Overall trading is in line with the Board’s expectations for the year. There were mixed trading patterns across the first 32 weeks. Despite a noticeable deceleration in the early part of the second quarter, same outlet like for like sales growth for the most recent 8 weeks to 7 May was in line with the 32-week trend at 5.1%.

8 weeks to 7 May 2005* Same Outlet (invested) Uninvested
Residential 5.2% 3.1%
High Street 5.6% 4.0%
Total 5.1% 3.2%

* Includes Easter in both years

To date in the pub market, there has been a contrast between the continuing growth in the demand for food and other drinks and the decline in on-trade beer. However, we are making substantial market share gains in all of these key product categories as a result of our range and value proposition and the consumer appeal of our brands and formats. Strong trading by our Central London businesses continues to benefit the trend of like for like sales in the High Street segment.

The long-term repositioning of the business is increasingly orientating Mitchells & Butlers towards the higher growth segments of the pub and pub restaurant market offering good value for money.

As we enhance our capacity management skills to drive high sales volumes, average weekly sales per managed pub have risen by 8% to £15.9k per week over the last 12 months. We have further opportunities for organic estate development where we are generating high incremental returns. Our focus on productivity and efficiency gains will remain key to offsetting the external cost pressures which are unlikely to diminish in the short term, with the regulatory and energy cost challenge expected to be similar next year.

Whilst the outlook for consumer spending is deteriorating, we remain confident that our strategy will enable us to capture additional market share and to leverage our economies of scale to generate further growth and cashflows to benefit shareholders.

For further information please contact:

Mitchells & Butlers plc
Kate Holligon – Investor Relations 0121 498 5092
Simon Ward – Media 0121 498 5795
Finsbury Group – James Murgatroyd 0207 251 3801

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