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Interim Results 2006 (For the 28 weeks ended 15 April 2006)

25 May 2006

Mitchells & Butlers plc - Interim Results

(For the 28 weeks ended 15 April 2006)


  • Revenue of £887m, up 2.7%
  • EBITDA of £207m, up 4.0%
  • Operating profit of £143m, up 4.4%
  • Profit before tax of £91m, up 9.6%
  • Earnings per share of 12.8p, up 18.5%
  • Interim dividend 3.65p per share, up 14.1%

(1) All results are before exceptional items
(2) These results are prepared in accordance with IFRS for the first time, 2005 comparatives have been restated accordingly


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

These are strong results driven by our leadership position in the fast growing pub food market and our accelerating gains in drinks market share. Our sales growth, combined with further productivity gains, have enabled us to overcome significant external cost pressures, increase operating margins and generate 18.5% growth in earnings per share.”

  • Same outlet like-for-like sales improved to 4.4% for 16 weeks to 13 May 2006*
  • On-going market share gains: same outlet food sales up 7.0%**, drink up 3.4%**
  • Average weekly sales per managed house up 7.1% to £17k
  • Further productivity gains overcome £14m external cost increases
  • Net retail operating margin slightly ahead of last year
  • High returns on investment: over 20% pre tax on last 2 years’ expansionary capital
  • Refinancing and estate revaluation process underway

* includes entire Easter period in both years being compared
** 32 weeks to 13 May 2006


Revenue in the 16 weeks to 13 May, has continued to grow strongly with same outlet like-for-like sales up 4.4%, an improvement on the 4.0% reported for the first 16 weeks of the year. As a result, same outlet like-for-like sales for the first 32 weeks of the financial year were 4.2%, slightly ahead of the trend reported for the 29 weeks with the Trading Update on 28 April. Same outlet like-for-like sales for the 3 weeks to 13 May were ahead by 5.1% aided by favourable weather compared to the previous 13 weeks. Like-for-sales by market segment for the second quarter and the first 32 weeks were as follows:

  16 weeks to 13 May 2006* 32 weeks to 13 May 2006*
Same outlet like-for-like sales    
Residential 5.6% 5.1%
High Street 1.9% 2.3%
Total 4.4% 4.2%
Uninvested like-for-like sales    
Residential 3.4% 3.0%
High Street 1.4% 1.8%
Total 2.8% 2.6%

* includes entire Easter period in both years being compared

Our pubs in residential locations generated strong like-for-like sales growth driven by the growth in food sales in our pub restaurants and local pubs, with same outlet like-for-like sales up 5.1% in the 32 weeks. This performance highlights the continuation of buoyant demand for eating out and accelerating drinks market share gains, both of which are reflected in our strong same outlet like-for-like sales growth of 7.0% in food and 3.4% in drink for the Company as a whole in the 32 weeks.

The performance of our pubs on the high street continues to reflect the very different characteristics of the three market segments in which they operate. Town pubs showed good growth, as did our central London estate, recovering well from the effect on sales of the terrorist activities of last summer. However the bars & venues market remains challenging with increased competition from later opening hours in local pubs following licensing reform. Overall, same outlet like-for-like sales for our high street businesses grew by 2.3% in the 32 weeks.

Operating profit, profit before tax and earnings per share (before exceptional items)

Net retail operating margin was slightly ahead of the first half last year, despite the increases in energy and regulatory costs of £14m, due to the further material gains in staff productivity, purchasing terms and the control of support costs.

Operating profit of £143m and profit before tax of £91m were achieved for the first half, up 4.4% and 9.6% respectively on last year, as previously presented in the Profit Estimate provided on 28 April. Earnings per share were 12.8p, 18.5% up on last year reflecting the strong trading performance and the benefit of the share buybacks.

Dividend and share buyback

In line with our commitment to progressive growth in dividends, an interim dividend of 3.65p per share, an increase of 14.1%, will be paid on 30 June 2006 to Shareholders on the register on 9 June 2006.

During the first half, £41m of the £100m share buyback announced in November was completed. The buyback was suspended when the Company was declared to be in an offer period by the Takeover Panel on 13 March 2006. It is the Board’s intention to resume the buyback with a view to repurchasing the remaining £59m of shares by the end of the financial year.

Cash flow and balance sheet strategy

Cash generation from the business remained strong. Cash flow from operations before exceptional items was £123m after an additional pension contribution of £20m and net capital expenditure of £79m. We continue to take advantage of the buoyancy in the commercial property market where demand for some individual pubs is leading to substantially higher values than has previously been the case. £17m of proceeds were achieved in the first half from the disposal of individual pubs and we now anticipate realising around £70m from disposals for the year as a whole.

The Board remains committed to refinancing the business later this financial year and to return at least £500m to shareholders in calendar 2006, less any funds required as part of the financing of any value creative acquisition opportunity.

The revaluation of the property portfolio is underway and its results will be published in parallel with the refinancing later this financial year.


Overall, there are some encouraging signs of stabilisation in consumer confidence in our markets. The strength of our brands and our customer focus are generating significant sales growth and accelerating market share gains. This performance is adding value to a very high quality portfolio of licensed assets which is currently being revalued. We will pursue consolidation opportunities where we believe we can create further value. We will also continue to return to shareholders any funds that are surplus to requirements. We remain confident that our strategy will go on delivering strong growth, further asset appreciation and value creation for the benefit of our shareholders.

For further information please contact:

Investor Relations:


Kate Holligon

0121 498 5092




Simon Ward

0121 498 5795

James Murgatroyd (Finsbury Group)

0207 251 3801

There will be a presentation for analysts and investors at 9am at the Merrill Lynch Financial Centre, 2 King Edward St, EC1. A live webcast of the presentation will be available on www.mbplc.com

Notes for editors:

  • 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.
  • Same outlet (invested) like-for-like sales include the sales performance for the comparable period in the prior year of all managed pubs that were trading for the two periods being compared. 94% of the estate is included in this measure.
  • Uninvested like-for-like sales include the sales performance for the comparable period in the prior year of those managed pubs that have not received expansionary investment of more than £30,000 in the two periods being compared. 86% of the estate is included in this measure.

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