Annual Report 2020

In compliance with Listing Rule 9.6.1, Mitchells & Butlers plc has today submitted the Company's Annual Report and Accounts 2020 (the Annual Report) to the National Storage Mechanism.

The Annual Report will shortly be available for inspection at: and can also be accessed on the Company's website at:

The Annual Report is expected to be despatched to shareholders on 21 December 2020.

The Company's Annual General Meeting is due to be held on Wednesday 24 March 2021. The Notice of the Annual General Meeting is expected to be despatched to shareholders in February 2021.

A condensed set of Mitchells & Butlers plc's financial statements and information on important events that have occurred during the year and their impact on the financial statements was included in the Company's Full Year Results announcement on 26 November 2020. That information, together with the information on Risks and Uncertainties given below and the directors' responsibilities statement below, constitutes the satisfaction of the requirements of DTR 6.3.5 in respect of information which is to be communicated via an RIS in unedited full text. This announcement is not a substitute for reading the full Annual Report and financial statements. To view the Full Year Results announcement, visit the Company website:

Risks and Uncertainties

This section highlights the top 13 principal risks and uncertainties that affect the Company, together with the key mitigating activities in place to manage those risks. This does not represent a comprehensive list of all of the risks that the Company faces, but focuses on those that are currently considered to be most relevant.

The processes that are used to identify and manage risks are described in the internal control and risk management statement on pages 68 and 69 of the Annual Report.

Risk categoryControls/mitigating activities
Risk category
1. Borrowing covenants

There are risks that borrowing covenants are breached because of circumstances such as:

i. The continuation of disruption due to the Covid-19 pandemic;
ii. A change in the economic climate leading to reduced cash net inflows; or
iii. A material change in the valuation of the property portfolio.

Risk increasing

Although the required waivers are in place, this remains a critical risk with an increased focus required given the current economic climate.
Controls/mitigating activities
Risk category
2. Material uncertainty

Given the very high degree of uncertainty resulting from the Covid-19 pandemic and resulting restrictions placed on trading in the hospitality sector, a material uncertainty therefore exists, which may cast significant doubt over the Group's ability to trade as a going concern.

Risk increasing

Please refer to the Going Concern disclosures on page 44 of the Annual Report.
Controls/mitigating activities
Risk category
3. Declining sales performance

This risk falls into the below main categories:

Sales: There is a risk that declining sales, concerns around consumer confidence, increased personal debt levels, squeezes on disposable income and rising inflation individually, together or in combination, may adversely affect our market share and profitability, reducing headroom against securitisation tests. Increased social distancing measures/requirements put in place may lead to further negative impact in sales/revenues.

Consumer and market insight: If Mitchells & Butlers fails to manage and develop its existing (and new) brands in line with consumer needs and market trends due to failure to obtain or use sufficient insight in a timely manner, this may lead to a decline in revenues and profits.

Pricing and market changes: If price changes are not intelligently applied due to a lack of appreciation of market sensitivities and elasticities, this may result in decreased revenue and profit.

Consumer behaviour as a result of Covid-19:

As pubs and restaurants reopen, consumers may have a different mindset to eating out, with health and safety at the forefront of priorities. Guests may want greater insight into practices, and food supply chain information to feel confident in their eating out experience. Equally some consumers may not heed the measures put in place to restrict the spread of the virus, potentially putting our team members and other guests at risk.

Risk increasing

Overall risk is increasing due to the decline of sales, as a direct impact of Government restrictions in response to the Covid-19 pandemic.
Controls/mitigating activities
Risk category
4. People planning and development

Mitchells & Butlers has a strong guest focus and so it is important that it is able to attract, retain, develop and motivate the best people with the right capabilities throughout the organisation. There is a risk that, without the right people, our customer service levels would be affected.

The effects of Covid-19 have been assessed in terms of our overall people planning and development risks. Prior to Covid-19, the external pipeline for high potential talent, particularly in senior roles was tightening due to the rise in opportunity in a growing and competitive marketplace. However, post Covid-19, the external recruitment activity over the prior year has also shown that replacement talent is no more than average in terms of skills, behaviours and cultural fit.

However, given the current economic climate and the anticipated high numbers of redundancies across UK employment in general, it is expected that this position may soften. We will therefore keep these new and emerging risks under review.

Risk increasing (specifically in London/South East)

There are a large number of EU workers within the Group, particularly in London and the South East. Therefore, the overall risk is increasing as the UK completes its transition period following the UK's departure from the EU. Restrictions on the movement of labour would have a material impact on both the cost of labour and access to talent.
Controls/mitigating activities
Risk category
5. Business continuity and crisis management

Mitchells & Butlers relies on its food and drink supply chain and the key IT systems underlying the business to serve its guests efficiently and effectively. Supply chain interruption, IT system failure or crises such as terrorist activity or the threat of a further disease pandemic might restrict sales or reduce operational effectiveness. Staff have the resources and ability to work remotely rather than rely on access to the Retail Support Centre.
Controls/mitigating activities
Risk category
6. Information security and disaster recovery

There is a risk that inadequate disaster recovery plans and information security processes are in place to mitigate against a system outage, or failure to ensure appropriate back-up facilities (covering key business systems and the recovery of critical data) and loss of sensitive data.

Given the increase in the level and frequency of global cyber-attacks, the likelihood of occurrence is therefore increasing, although current IT controls and monitoring tools are robust.

Risk of non-compliance with data protection laws is an increasing risk for the business to ensure full compliance remains up to date.

Risk increasing

The increased activity, information security and reliance on IT systems continues to be a key focus to ensure critical IT systems are kept secure and tested frequently and any vulnerabilities identified are closed out efficiently.
Controls/mitigating activities
Risk category
7. Wage cost inflation

There is a risk that increased costs associated with further increases to the National Living Wage may adversely impact upon overall operational costs.

The overall impact of Covid-19, in relation to our wage cost inflation risk, has been assessed by management. It is unclear at this stage how Covid-19 may affect overall wage costs as we head into FY 2021. Therefore, this review will continue as part of our review of all emerging risks facing the business.

Risk increasing

Due to further increases set by Government, labour costs could continue to increase.
Controls/mitigating activities
Risk category
8. Pension fund deficit

The material value of the pension fund deficit remains a risk.
Controls/mitigating activities
Risk category
9. Failure to operate safely and legally

A major health and safety failure could lead to illness, injury or loss of life or significant damage to the Company's or a brand's reputation.

Social distancing measures: we support the need for social distancing measures to reduce the spread of Covid-19. While social distancing measures are in place the capacity of our businesses will be reduced, impacting the offer to our guests and the financial model of our operations. Given the unknown nature of the virus the duration of distancing measures is uncertain.

Risk increasing

The overall risk is increasing mainly due to the additional measures enforced as a result of the Covid-19 pandemic. However, robust controls are in place.
Controls/mitigating activities
Risk category
10. Cost of goods – price increases

Food: The cost of food for resale increases due to changes in demand, food legislation, exchange rates and/or production costs and uncertainty of supply, leading to decreased profits.

Drinks: The cost of drinks for resale increases due to changes in demand, legislation, exchange rates and production costs, leading to decreased profits.

Goods not for resale: Increases in the cost of goods not for resale and utilities costs as a result of increases in global demand and uncertainty of supply in producing nations can have a significant impact on the cost base, consequently impacting margins.

Brexit: Given that a large amount of food spend is sourced from EU countries, the overall risk and impact of additional costs is higher. In addition, there is an increasing risk of sourcing certain products given the possibility of delays at ports following the end of the transition period following the UK leaving the EU. At the end of that transition period, the cost of goods may be impacted by changes in terms of trade and therefore tariffs, additional border controls and fluctuations in the value of sterling.

Risk increasing

The overall risk of price increases is increasing, largely due to the continued uncertainty around Brexit.
Controls/mitigating activities
Overall, cost increases are mitigated as Mitchells & Butlers leverages its scale to drive competitive cost advantage and collaborates with suppliers to increase efficiencies in the supply chain. The fragmented nature of the food supply industry in the world commodity markets gives the Company the opportunity to source products from a number of alternative suppliers in order to drive down cost. Consideration has been given to potential areas such as supply chain risk (e.g. customs controls on imports), labour risk and economic disruption. Key mitigating activities for food and drink are detailed below:

Brexit risks have remained a key focus and have been subject to continued regular review and development by management during FY 2020. Brexit risks and the mitigating action plans are embedded within each of the key risks, which are regularly reviewed by both 'risk owners' and the Risk Committee.

A number of key measures have been taken to mitigate both the known and emerging risks that Brexit may present to the business. For example, we have secured agreements with our key suppliers which include:


During the Covid-19 pandemic, suppliers have continued to remain very supportive and no material further supply chain associated risks have materialised.
Risk category
11. Food supply chain safety

Malicious or accidental contamination in the supply chain could lead to food goods for resale being unfit for human consumption or being dangerous to consume. This could lead to restrictions in supply which in turn cause an increase in cost of goods for resale and reduced sales due to consumer fears and physical harm to guests/employees.

Allergens are becoming an increased risk within the industry. However, this is a well managed risk within the Group.
Controls/mitigating activities
Risk category
12. Health and lifestyle concerns

Failure to respond to changing consumer expectations in relation to health and lifestyle choices and our responsibility to facilitate those.

Risk increasing

There is an increasing level of focus from media and Government on health and obesity issues, predominantly impacting the UK. This heightened consumer awareness has increased consumer awareness of the health implications of their eating and drinking choices and it is important that we continue to evolve our offers to facilitate consumers to make informed decisions. Failure to meet these expectations could have both a financial and reputational impact on the business. Therefore, this risk is increasing.
Controls/mitigating activities
Risk category
13. Environment and sustainability

Climate change, biodiversity depletion and environmental pollution present a risk to our ability to source products, with food being particularly at risk.

Risk increasing

The impact of extreme and longer-term shifts in weather patterns, natural resource depletion and other effects of climate change could impact the business both financially and reputationally.

These factors could disrupt our supply chain and the ability to source products due to reduced availability. Regulatory action to manage climate change could result in the introduction of additional taxes or restrictions being imposed.

The business also has a responsibility to continually aim to reduce its usage of natural resources and its negative impact on the climate. Therefore, this risk continues to increase.
Controls/mitigating activities

Directors' responsibilities statement

The Annual Report contains the following statement regarding responsibility for the financial statements in compliance with DTR 4.1.12. This statement relates solely to the Annual Report and financial statements and is not connected to the extracted information set out in the Full Year Results announcement:

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

  • the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;
  • the Strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
  • the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

The Directors of Mitchells & Butlers plc are listed in the Annual Report and on the Mitchells & Butlers plc website,

For further information, please contact:

Investor Relations
Amy de Marsac
0121 498 6514

James Murgatroyd (Finsbury)
020 7251 3801