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Preliminary Results for the financial year ended 25 September 2004

Mitchells & Butlers plc - Preliminary Results

(For the financial year ended 25 September 2004)


  • Turnover up 3.7% to £1,560m
    - Same outlet like for like sales up 5.6%
  • Operating profit* up 3.6% to £285m
  • Operating cashflow after net capex* up 18% to £284m
  • Profit before tax* down 7.5% to £184m**
    - Reflecting £501m special dividend in December 2003
  • Earnings per share* up 21% to 22.2p**
    - Basic earnings per share of 22.4p (2003: 17.0p)
  • Final dividend 6.65p, up 18% on 2003 final
    - Total dividend for year 9.5p
  • Continued success of strategy to drive profitable sales
    - 7% food and drink volume growth
  • Sales momentum sustained in first 8 weeks of current year
    - Same outlet like for like sales up 5.8%
  • £100m share buy-back programme during 2005
    - A result of strong trading and successful disposals

* Before exceptional items
** Pro forma comparative for 2003. Statutory comparatives for 2003*: PBT £220m, EPS 20.3p

Tim Clarke, Chief Executive commented:

“We have achieved strong growth in both food and drink sales and significant market share gains. This, coupled with our new financing structure, has enabled us to deliver 21% growth in earnings per share.”

“We are sustaining strong sales momentum, driven by the performance of our pub restaurant and local pub brands in residential areas. Whilst the outlook for wider consumer spending is uncertain our value strategy leaves us well placed to capture further market share gains. We welcome the Government's commitment to a four year staged approach on smoking in pubs and the opportunity to engage in constructive dialogue on the current proposal.”

Current Trading

The sales momentum reported in the second half has been sustained in the first 8 weeks of the new financial year despite strong comparatives in the prior year from the Rugby World Cup and good weather:

  Same outlet like
for like sales*
Uninvested like
for like sales*
Residential 7.3% 5.6%
High Street 3.1% 2.1%
Total 5.8% 4.4%
*8 weeks to 20 November 2004

The residential sectors of the market continue to drive our growth with strong volume gains in both our pub restaurants and our local pubs. The high street remains competitive, particularly in the late night segments, however trading in our Central London pubs has continued its strong recovery.

In the first 8 weeks, our sales initiatives have continued to deliver profitable growth. Uninvested like for like sales grew by 4.4% and gross margins were broadly unchanged with food and drink prices down by less than 1%.

Share Buy-back

In view of the strong trading performance and cash generation of the business, the Board has decided to commence a share buy-back programme designed to repurchase £100m of the Company’s shares during the course of the 2005 financial year. The buy-back further demonstrates the Board’s commitment to the maintenance of an efficient balance sheet through the effective deployment of cash in the best interests of shareholders.


Following the actuarial valuation of the Pension funds, the Company will contribute £40m (£28m net of tax) to the plans over the next three years, in addition to the remaining £20m (£14m net of tax) committed at the time of the refinancing. This will help to reduce further the Company’s future liabilities in respect of the remaining deficit in the funds, £167m as at 31 March 2004, on an ongoing actuarial basis. The annual service contributions made by the Company will increase by approximately £3m. The next actuarial valuation will take place in 2007.

Accounting Policies

The Company intends to adopt FRS 17 for pensions accounting for the year ended September 2005. FRS 17 requires that the pension scheme deficit is recognised in full on the balance sheet, the current service cost is charged against operating profit and the interest cost net of the return on assets is recognised as a finance cost.

As at 25 September 2004 the FRS 17 deficit was £114m net of the deferred tax asset and the total charge against profit before tax for the year would have been £13m.

The 2005 financial year will cover 53 weeks as required from time to time due to a typical year consisting of 13 four weekly periods. It is estimated that the 53rd week will add £4m of profit before tax.


Mitchells & Butlers’ business is increasingly focused on the long term growth of the informal, value for money, eating and drinking out markets in residential areas where our pubs are capturing a disproportionate share.

We have made a good start to the year which gives the Board confidence in the continuing success of our sales strategy, our ability to overcome the cost pressures that the business faces and the generation of further growth in earnings and cashflows in the year ahead.

The Board will continue to use the cashflows generated to deliver value to shareholders, through re-investment for high returns, pursuit of value creative acquisitions, or return by way of dividend and share buy-back.

For further information please contact:

Kate Holligon - Investor Relations 0121 498 5092
Simon Ward - Media 0121 498 5795
Finsbury Group - James Murgatroyd 0207 251 3801

A presentation for analysts and investors will be held at 9am at the Merrill Lynch Financial Centre, 2 King Edward Street, London EC1A 1HQ. A live webcast of the presentation will be available on the Mitchells & Butlers website www.mbplc.com .

Notes for editors:

  • Mitchells & Butlers is the leading operator of managed pubs, owning and operating approximately 2,000 high quality pubs in prime locations nationwide. The group’s predominantly freehold estate is biased towards large pubs in residential locations. With some 3% of the pubs in the UK, Mitchells & Butlers has 9% of industry sales, and average weekly take per pub of over three times the industry average.
  • Same outlet like for like sales include all managed pubs that were trading for the two periods being compared. Approximately 95% of the estate is included in this measure.
  • Uninvested like for like sales include only those managed pubs that have not received expansionary investment of more than £30k in either year being compared. Approximately 85% of the estate is included in this measure.

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