Annual Report
and Accounts 2024
Introduction
01 About us/Financial
highlights/Environmental
targets
02 At a glance
07 Welcome to
Mitchells & Butlers
08 Our purpose
Strategic Report
18 Chair’s statement
20 Chief Executive’s
business review
24 Our markets
26 Our business model
30 Value creation story
34 Our strategic priorities
36 Key performance indicators
38 Our sustainability targets
40 Task Force on Climate-related
Financial Disclosures
46 Risks and uncertainties
53 Compliance statements
– Corporate viability
disclosure
– Non-financial and
sustainability information
statement
– Section 172 Companies Act
statement
56 Financial review
Annual Report
and Accounts 2024
Contents
Governance
60 Governance at a glance
62 Chair’s introduction
to governance
64 Board of Directors
66 Directors’ report
74 Statement of Directors’
responsibilities in respect
of the Annual Report
and Accounts
75 Corporate governance
statement
88 Audit Committee report
92 Report on Directors’
remuneration
Financial Statements
114 Independent auditor’s
report to the members
of Mitchells & Butlers plc
122 Group income statement
123 Group statement of
comprehensive income
124 Group balance sheet
125 Group statement of changes
in equity
126 Group cashflow statement
127 Notes to the consolidated
financial statements
180 Mitchells & Butlers plc
Company financial statements
182 Notes to the Mitchells &
Butlers plc Company financial
statements
Other Information
186 Alternative performance
measures
190 Shareholder information
About us
Financial highlights
Revenue
£2,610m
FY 2023: £2,503m
Statutory operating profit
£300m
FY 2023: £98m
Adjusted operating profit
b
£312m
FY 2023: £226m
Financial review
Go to page 56
Environmental targets
Net Zero
c
Greenhouse gas emissions by FY 2040
(Scope 1, 2 & 3)
Zero
Operational waste to landfill by FY 2030
50%
Reduction in food waste by FY 2030
Sustainability targets
Go to page 38
a. As at 28 September 2024.
b. The Directors use a number of alternative
performance measures (‘APMs’) that are
considered critical to aid understanding of the
Group’s performance. Key measures are explained
on pages 186 to 189 of this report.
c. As defined on page 45.
NB. FY 2023 was a 53-week period.
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 01
Introduction
Our brands
Our balanced portfolio of recognised and diversified brands
and formats is loved and trusted by our guests, with 65%
home-grown and over 75% in existence for over 20 years.
43 sites
Alex city centre bars and brasseries offer all day
menus and drinking across Germany.
46 sites
All Bar One bars are modern and cosmopolitan
serving food and drink in bright contemporary
environments positioned in city-centre locations.
31 sites
Ego restaurants are Mediterranean-style family
restaurants based across the UK. The brand
was fully acquired in 2023, having operated
as a joint venture since 2018.
149 sites
Ember Inns are local pubs with an individual
name offering food with a wide range of cask
ales. They are in prominent residential locations.
129 sites
Miller & Carter are steakhouse restaurants
offering premium-grade beef. They are
designed to be the steak lover’s destination
for everyday and special dining-out occasions.
124 sites
Premium Country pubs are a collection of
individual pubs situated in both rural and
suburban areas. The pubs have contemporary
dining rooms and bars and many have terraces
for al fresco dining.
89 sites
Stonehouse pubs offer freshly-carved,
slow-cooked roasts, and stone-baked pizzas
along with other pub classics.
235 sites
Our suburban pubs are typically located in
densely populated residential areas and are
local community pubs serving ‘value for
money’ food on sizzling skillets.
81 sites
Nicholson’s has been in operation since 1873
and is famous for its extensive cask ale and pie
range. Nicholson’s sites include examples of
historic, authentic pubs in the United Kingdom.
Mitchells & Butlers
at a glance
02 Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
27 sites
Browns restaurants are mainly located in city
centres around the UK and offer casual,
elegant, brasserie dining often in landmark
architectural buildings.
105 sites
Castle pubs are a collection of eclectic urban
pubs, with each pub having an individual
character to suit its community. The pubs
are located in city and suburban areas.
151 sites
Harvesters are pub restaurants in suburban
roadside locations, principally targeting families.
They are well-known for spit-roast chicken,
smoked ribs, burgers and the salad cart.
67 sites
Our High Street pubs are unique, individual
pubs located in high footfall locations in cities
and towns throughout the UK. The pubs offer
music, sport and enjoyable hospitality at
competitive prices points.
151 sites
Toby Carvery is one of the leading brands in
the UK carvery sector. It aims to offer a good
value and varied menu of roasts from its
famous carving deck. The sites are generally
in suburban roadside locations.
176 sites
Vintage Inns are traditional country pubs
serving freshly cooked food with a wide range
of beers, spirits and great wines at fair prices.
40 sites
O’Neill’s are Irish bars located in city and town
centres as well as on suburban high streets.
O’Neill’s offers live sports and, in larger sites,
entertainment through music rooms.
10 sites
Located in the North West and Midlands, Pesto
offers authentic and freshly prepared Italian
small plates at sensible prices in an informal,
relaxed setting.
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 03
Introduction
Our performance
We are a highly cash generative
business with a long-term strategy
to transfer debt to equity as debt
is paid down.
£62m
of cashflow generated in FY 2024
Our value proposition
Our business has unique strengths that enable
us to create value for our stakeholders.
Our property
We have a freehold estate of large,
well-positioned pubs and restaurants
with high amenity levels.
83%
of pubs freehold and long leasehold with
major investment planned every seven years
Our people
We have a proven senior
management team and
depth of talent.
Highest-ever employee
engagement scores.
Our brands
We have a diversified portfolio
of proven, established brands.
65%
home-grown and over 75%
in existence for over 20 years
Mitchells & Butlers at a glance continued
04 Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
London
21%
South East
(excluding London)
14%
Wales 4%
East of
England
8%
West Midlands
15%
East Midlands 5%
North West
10%
North East 3%
Scotland 5%
South West 7%
Yorkshire and Humberside 8%
UK sales by region (FY 2024)
Our people
Our people are fundamental to the delivery
of great experiences for our guests
50,000+
Employees making us one of the largest
employers in the industry
17%
Retail staff turnover reduced by 17 percentage
points to 64% due to the effective delivery
of our People Promise
1,600+
Apprentices currently in learning
Employees
Go to page 31
Our pubs
1,654
managed businesses with favourable spread
of locations, price points and occasions.
This leaves the business well-hedged against
changes in consumer taste
The Clachan, Kingly Street, London.
The Belvedere Arms, Sunninghill
Miller & Carter steakhouse, Stevenage
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 05
Introduction
Introduction
06 Annual Report and Accounts 2024 Mitchells & Butlers plc
Welcome to
Mitchells & Butlers
We are delighted to report that our continued
like-for-like sales outperformance against the
market, coupled with easing inflationary costs
and focus on efficiencies, has resulted in strong
profit growth this year.
We remain committed to our Ignite programme
of initiatives and our successful capital investment
programme, driving further cost efficiencies
and increased sales. We have confidence that
continued focus on effective delivery of our
strategic priorities will generate further value
from our enviable estate portfolio and customer
offers and give us a strong foundation for
continued longer-term outperformance.
Sustainability and respect for the environment
remain central to everything we do, with some
notable progress during the year, including
investment in removing gas as an energy source
from our estate as well as a significant reduction
in waste to landfill.
Our purpose is to be the host of life’s memorable
moments, bringing people and communities
together through great experiences. Over the next
few pages, we examine this purpose in detail,
breaking it down into its constituent parts and
exploring how our teams’ commitment to customer
service delivers to our guests day-in day-out.
Phil Urban
Chief Executive
Our purpose is to be the
host of life’s memorable
moments, bringing people
and communities
together through great
experiences.
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 07
Introduction
Delighting our guests
every time they visit us
Our skilled teams host a wide range of occasions and
experiences across our brands, and understanding our
guests’ individual needs is central to providing great
experiences. Our teams’ focus is on delighting our guests
every time they visit us, supported by a number of
central initiatives to enhance guest experience.
Our recruitment, at every level, seeks to discover those
with the skills to provide a welcoming environment for
our guests and then to take responsibility for the guest
experience from start to finish. In addition, our training
helps to develop those innate skills further, with rewards
for those who consistently score highly on guest review
scores. Supporting our operational teams, is an
investment programme that ensures not only that we are
exposed to the right market segments based on location,
site characteristics and local demographics but that our
businesses are safe, reduce their impact on the
environment and remain competitive for our guests.
Delighting our guests is as much about culture and
mindset as it is about specific procedures, with our high
guest review scores and consistent like-for-like sales
growth representing a tangible testament to the work
our teams continue to devote to this priority.
Our purpose
is to be the
host…
41
Initiatives in place
currently to improve
guest experience
4.5
Average guest review
score out of 5
08 Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
5.3%
Like-for-like sales
a
growth
Our General Managers have
responded directly to feedback
from guests during the year taking
responsibility, driving
improvements and building
relationships
195
Investment projects in FY 2024
£154m
Invested in our estate in FY 2024
a. The Directors use a number of
alternative performance measures
(‘APMs’) that are considered critical
to aid understanding of the Group’s
performance. Key measures are
explained on pages 186 to 189
of this report.
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 09
Introduction
What makes an experience
memorable
Our people, pubs, and restaurants are here to make
sure every memorable moment our guests celebrate
with us is met with excellent service. This covers a huge
variety of occasions from birthdays, to Mother’s Day,
to Christmas, to leaving parties, to reunions after
a period apart… or indeed just a much-anticipated
night out with close friends.
Whatever the occasion, all our brand offers are informed
by guest insight to ensure we provide environments and
menus which create memorable moments for our guests.
Our marketing teams support our pubs and restaurants
through tailor-made menus and promotions to enhance
the customer experience and drive sales. Our
understanding of how best to achieve this grows year-
by-year through our analysis of sales data and customer
feedback, with the aim that we are constantly improving
everything we do to further delight our guests.
of life’s
memorable
moments…
Harvester hosted a Big
Christmas Party on
Thursday 12 December with
our customers enjoying a
sprinkle of Harvester magic
thanks to a 3-course festive
menu coupled with a
complimentary glass of fizz.
10 Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
£33m+
of sales over the three main
trading days of Christmas this year
960k+
main meals sold over the
Mother’s Day weekend this year
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 11
Introduction
We understand the importance
of protecting communities and
the environment around them
Our businesses have long been a hub for local
communities to gather, providing intangible benefits
beyond the core offer of food and drink.
Our pubs, bars and restaurants act as a meeting place,
in the heart of the community, where people of all
backgrounds can socialise. We believe that this sense
of community is as important now as it ever has been
and is an important consideration in the evolution
of our brand offers.
We take our responsibility to the communities we serve
seriously, and have developed a plan, as part of our
sustainability strategy, to increase the positive effects
we have on society and the communities we work in and
reduce the negative impact we have on the environment.
Further details on how we aim to achieve this through
offering employment opportunities to people impacted
by homelessness, fundraising, and supporting the
provision of food to homeless people, along with various
examples of our work in FY 2024, can be seen overleaf.
bringing
people
and
communities
together…
12 Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
£200k+
raised for Social Bite from the
Festival of Kindness
16
tonnes of unavoidable surplus
food, equivalent to 38,000 main
meals, donated to 732 charities via
FareShare in the year
726k
meals redistributed
through Too Good To Go
98%
of operational waste diverted
from landfill in FY 2024
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 13
Introduction
Charitable partnerships
Caring for the community is one of three pillars of
our company sustainability strategy, with charitable
partnerships being an important element of that work.
The community pillar aligns with the ‘Social’ aspect of
our Environmental, Social and Governance strategy.
In 2019 the Company identified homelessness as a cause
with close links to the business, given hospitality’s
historical role of providing warmth, sustenance and
shelter to the public, and given the issue of homelessness
in the many city centres in which we operate.
Over the past four years we have developed a strong
partnership with Social Bite. To maximise the impact
of this partnership, this year Social Bite became our
charitable partner both at a corporate and a brand level.
Social Bite’s size makes it an effective partner as we
can create a genuine partnership, where we can make
a material difference to Social Bite’s impact, and there is
significant potential for our employees to benefit directly
through involvement in joint activity, enhancing our
employer proposition.
We believe that there is significant scope to build the
partnership in the future with three main focuses:
1) Food and drink provision – our fundraising efforts
support the provision of food and drink to people
impacted by homelessness through Social Bite’s
network of partner charities throughout the UK.
2) Jobs first programme – we have employed 26 people
to date from Social Bite’s academy through the
established programme. Taking the learnings
forward we believe there is significant scope to
grow the programme and we are funding a new role
within Social Bite focused entirely on placing people
impacted by homelessness into Mitchells & Butlers
roles and supporting them through the first months
of their employment.
3) Help in the development of a new ‘village’ – Social Bite
have one homelessness village where they offer housing
and support to those impacted by homelessness in
Edinburgh with two more underway. Our long-term
ambition is to support the development of a village
in England.
Bringing people and communities together continued
Social Bite
14 Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
100-mile challenge
In September, almost 3,500 of our employees covered
over 100,000 miles as part of the 100-mile challenge for
Social Bite in just 30 days, raising over £113,000 for the
movement to end homelessness.
From treasure hunts and paddleboarding to fancy dress
walks featuring Willy Wonka and the Oompa Loompas,
each team contributed in their own unique way!
Some even went the extra mile, like Joe, a team coach
at the Tudor Rose in Coulsdon, London, who completed
a marathon every week throughout September,
raising £1,400. Another team cycled all the way from
Birmingham to London, visiting every Nicholson’s pub
along the way.
Festival of Kindness
In December 2023, for the fourth year running, Social
Bite ran a UK-wide relief effort called the Festival of
Kindness. Its aim was to provide essential support
and bring some festive cheer to people experiencing
hardship through the winter. Supporters were asked to
donate money, goods and time to provide hundreds of
thousands of Christmas meals, winter food packs, gifts
and essentials to people experiencing homelessness
and poverty across the UK.
Social Bite directly provided 680 Christmas dinners
for people who were homeless on Christmas Eve and
Christmas Day, and provided an additional 166,000
meals, wrap-around support and a sense of community
over the winter months across the UK, both directly
through their social business coffee shops, and through a
network of charity partners and grassroots organisations.
For the first time since our partnership began in 2020,
all four divisions and their brands took part, with 1,500
venues across the UK inviting and facilitating guests
to add a donation to their bill throughout December
resulting in over 34,000 meals being provided through
Social Bite’s coffee shops as a result of our donations.
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 15
Introduction
We have a team of passionate,
dedicated, knowledgeable
and capable people, critical
to delivering outstanding
experiences
Eating and drinking out remains the affordable luxury
that many consumers are happy to continue to prioritise.
We operate in a highly-fragmented market, with
significant opportunity to grow market share by offering
the right mix of food, drink, amenity and service.
Our sector is focused on creating affordable experiences
that can’t be replicated at home whilst delivering high
levels of customer service. We have a team of passionate,
dedicated, knowledgeable and capable people critical to
delivering outstanding experiences to our guests as well
as a diverse portfolio of brands and formats delivering
specific offers to suit a range of occasions. We invest
in training to ensure our people achieve their potential
through avenues such as apprenticeships, training
programmes to promote internal progression, and
a gamut of on and off-job training to ensure we provide
food and drink excellence safely.
As ever, high-quality food and drink, served by an
engaged team, in an appealing environment remain
key elements to providing our guests with memorable
experiences, alongside the highest safety standards.
We continually assess changing guest preferences
to position our brands for success. To achieve this, we
build partnerships with suppliers to develop innovation
sustainably in the supply chain, leveraging our scale
to increase choice and quality whilst reducing the
environmental impact of the food and drinks we serve.
through
great
experiences
16 Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
High
Team engagement
at record highs
4.5
Average guest review
scores out of 5
in the year
61%
of General Managers
promoted through
internal succession
1,600+
apprentices currently in learning
-17%pts
Retail staff turnover reduced
this year
Strategic Report Governance Financial Statements Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024 17
Introduction
We are delighted with the
performance over the last
financial period, with like-for-
like sales continuing to
outperform the market,
coupled with strong cost
control, combining to deliver
notable year-on-year profit
growth. We have also achieved
exceptional people metrics,
which reflects the depth
of talent in the organisation,
and are delivering on guest
expectation, with strong guest
scores across the brand
portfolio.
Chair’s statement
“The successful implementation of our strategic
priorities by our proven management team has
delivered a year of strong growth and performance.”
Bob Ivell
Chair
Our investment programme is keeping our
brands fresh, relevant and highly competitive;
and Ignite, our transformation programme,
gives us a roadmap of initiatives that will
continue to drive improvement across every
aspect of the business, meeting the consumer
trends that we have identified.
Whilst we continue to face cost headwinds,
especially relating to employment, we remain
well placed to continue to move the business
forward whilst ensuring that guest experience
remains at the heart of everything we do.
Our purpose
During the period, our purpose to be the host
of life’s memorable moments, bringing people
and communities together through great
experiences, remains unchanged. Our brands’
outperformance of their peers is testament
to our success in its delivery.
To support this purpose, at a corporate level,
we have strived to enhance our social impact
through financial and practical support to our
partner Social Bite, a social enterprise tackling
homelessness in the UK. Of particular
importance is the Jobs First programme,
helping people back to independence through
long-term employment opportunities. To date
this has employed and supported 26 people
into full employment in our business. We are
ambitious to grow this partnership further
and enhance our positive social impact over
the coming years.
We are committed to reducing the
environmental impact of our business and
the Board has set challenging targets to drive
continued momentum in this area. We were
delighted to receive Science Based Targets
initiative validation for our Net Zero plans
in January 2024. Amongst other initiatives
we continue to develop our understanding
of strategies to remove gas from operations,
all to deliver targets.
Our culture
Our people are fundamental to the delivery
of great experiences for our guests. We are
delighted with the strength of the people
metrics delivered in the year. Engagement
scores have continued to improve across all
employee groups, and turnover rates are at
record lows. These metrics reflects the depth
of talent across the organisation and the
commitment of our teams to work together
to drive the future success of the business.
I would like to thank all of them, for all they
have done for our guests and our business.
Our values
The values we hold ourselves accountable
to across the business are Passion, Respect,
Innovation, Drive and Engagement. We believe
that these foster the culture and environment
needed to enable our people to work
collectively, and in union with our stakeholders,
to support our purpose.
18 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
“Our people are
fundamental to
the delivery of great
experiences to our
guests. We are
delighted with the
strength of the people
metrics delivered
in the year.”
Our pensioners
With both of our main pension schemes now
in buy-in or buy-out they are fully funded and
the need for further contributions has ceased.
This positive development reflects our
commitment to our pensioners both now and
into the future and has substantially eliminated
all remaining pensions risk in the Group.
Our Board
There have been no changes to the Board
membership during the year. I believe we
have a group of Non-Executive Directors with
the complementary blend of knowledge and
experience to lead the business successfully.
Further detail on the operation of the Board
in the year can be found in the Governance
section which starts on page 59.
Bob Ivell
Chair
Mitchells & Butlers plc
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 19
Strategic Report
Chief Executive’s business review
Business review
Persistent inflation over the past two years has
put pressure on the hospitality sector as while
the worst of the pandemic-related disruptions
have eased, rising costs in food supply chains,
energy, and labour which followed have
impacted margins. Looking forward costs in
general are abating, with the notable exception
of wages, which continue to rise sharply based
on increases both in the statutory National
Living Wage and the level of Employer National
Insurance contributions. The resulting
widespread and unavoidable increase in prices
has made eating out a more considered choice
for many households and the culmination of
these pressures has been net closures of 1%
in the year to June 2024
b
. Despite these
pressures, Lumina reported sales growth in
the pubs, bars and restaurants market of 1.5%
in 2024, with managed groups outperforming
and delivering growth of 2.9%. With positive
indications of increasing disposable income
in recent months as inflationary pressures on
households ease
c
sales growth for the sector is
expected to remain resilient in the year ahead
with forecast growth for managed pubs, bars
and restaurants of 2.6%, driven by price and
spend per head with volumes anticipated
to be in low single digit decline.
“We focus on maximising the value generated from our 83%
freehold and long leasehold estate, utilising the diversity of
our brand portfolio to grow market share across a broad
range of consumer occasions, demographics and locations.”
Phil Urban
Chief Executive
Against this backdrop total sales across the
period were £2,610m reflecting 6.1% growth
on FY 2023, on a 52-week basis. Like-for-like
sales
a
increased by 5.3% with strong
performances through the brand portfolio and
continued outperformance against the market
as a whole. Operating profit, after separately
disclosed items, of £300m reflects a notable
recovery from last year (FY 2023 £98m) built
on this strong sales performance coupled with
falling cost inflation. Adjusted operating profit
a
of £312m represents a £91m increase in
profitability from last year, on a 52-week basis.
We made a very good start to the year with
like-for-like sales
a
growth of 7.2% over the first
seven weeks. Strong trading over the important
festive period then led to an acceleration of
like-for-like sales
a
growth over the latter half
of the quarter to 8.2%, resulting in overall
like-for-like sales
a
growth for the quarter
of 7. 7% .
Sales remained strong through the second
quarter particularly on key trading dates.
Across the quarter, we recorded like-for-like
sales
a
growth of 6.1%, comprising drink sales
growth of 5.3% and food sales growth of
6.6%, benefiting from the movement of Easter
forward from the third quarter in the prior year.
Over the third quarter like-for-like sales grew
by 3.4%, adversely impacted by the movement
of Easter, the easing of the inflationary
environment and a period of generally wet
weather. In the fourth quarter sales grew by
3.4%, having been negatively impacted by riots
in city centres during August, as well as an
unseasonably cool and wet summer.
Throughout the year we have consistently
outperformed the market, as represented
by the CGA Business tracker, by c.2ppts.
Overall cost inflation abated through the
financial year. Whilst the recent level of
statutory National Living Wage increases
(effective in April each year) has been relatively
high at approximately 10%, other costs have
generally returned to more normalised levels
and gas and electricity costs in particular have
been in deflation. Strong and resilient sales
growth combined with effective cost efficiency
initiatives and abatement in overall cost inflation
has driven a marked increase in profitability.
20 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Our strategic priorities
Our strategic pillars, which provide the
foundation for our performance, remain
consistent:
• Build a more balanced business
• Instil a commercial culture
• Drive an innovation agenda
We focus on maximising the value generated
from our 83% freehold and long leasehold
estate, utilising the diversity of our brand
portfolio to grow market share across a broad
range of consumer occasions, demographics
and locations.
Our Ignite programme of work remains at the
core of our long-term value creation, with a
range of initiatives underway focused on
driving sales and delivering cost efficiencies.
During the year we have successfully deployed
‘My Account’ across multiple brands, providing
guests with a single platform to manage their
bookings, orders and offers. This has led
to a notable rise in customer engagement,
particularly among younger guests, and
positions ‘My Account’ as a key platform for
future interactions as customer behaviours
evolve. In addition to digital solutions, we
remain focused on delivering excellent guest
experiences and equipping our managers with
the skills to drive the sales of their businesses.
A specific focus during the year has been
enhancing dish availability, a key consideration
in guest experience, using technology to more
accurately forecast sales which inform orders
and provide guidance to kitchen teams on the
optimal volume of food to prepare to satisfy
demand. The benefit of these initiatives is
reflected in sustained like-for-like sales
a
growth
across our brand portfolio as well as continued
market outperformance on guest review
scores, which averaged 4.5 out of 5.
Alongside driving sales, we have a range of
initiatives focused on enhancing productivity
and efficiency to help mitigate inflationary
costs. Driving a reduction in our energy
consumption remains a priority, both to
improve efficiency and to support our
sustainability objectives. During the year we
achieved a further 2% reduction in overall
energy usage, aided by investment voltage
optimisers and solar panel roll out. After a
successful trial we are also now rolling out the
use of remote control in-site energy monitoring
systems. Remote control of heating, for
example, provides a significant opportunity to
reduce consumption whilst also relinquishing
our managers of one of their many daily tasks,
allowing them to focus on guests.
During the year we held a number of events,
gathering different cohorts from various levels
across the organisation, to generate fresh ideas
for the next wave of Ignite initiatives to launch
in FY 2025. These sessions successfully
identified numerous new opportunity areas,
as well as additional value to be realised
through improving the effectiveness of existing
work streams.
Our capital programme continues to deliver
value through improving the competitive
position of our pubs and restaurants within
their local markets. Over the last year, we have
completed 195 investment projects comprising
178 remodels, 11 conversions and 6 acquisitions.
We are continuing to see strong performances
from our investment projects, with remodel
returns for projects completed in the year of
37%, and remain focused on re-establishing
the target 7-year investment cycle which was
interrupted by Covid-19.
In June 2023 we completed the acquisition of
the remaining 60% stake in 3Sixty Restaurants
Limited, owners of Ego Restaurants, having
acquired the initial 40% stake in August 2018.
Ego is a collection of Mediterranean-inspired
pubs and restaurants where guests can enjoy
freshly cooked food, cocktails, cask ales and
wine from across the continent. The process of
integrating Ego is making good progress, with
all sites having now moved onto our systems
and processes. During the first half of FY 2024
we are starting to leverage the brand internally
and have converted 5 of our existing sites to the
Ego offer, with average sales doubling following
conversion. We anticipate conversion of
a further 5–10 sites in FY 2025.
In May 2024 we completed the acquisition
of Pesto Restaurants. Pesto delivers an Italian
tapas offer across its ten strong estate which
is designed to create informal social and
interactive experiences, based on sharing
with friends and family. Pesto compliments
the Mediterranean theme of Ego and together
they provide further diversification of the
estate with a low meat offer which appeals to
the health-conscious guest. The consideration
payable for the business is partly contingent
on its performance over the first year of trading
under our ownership, but is not expected to be
more than £15m.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 21
Strategic Report
Chief Executive’s business review continued
People
Our people are fundamental to the delivery of
great experiences for our guests. As such we
are delighted with the progress made across
our people measures during the year, which
reflects our continuous focus on engagement,
recruitment and retention. Engagement scores
have continued to improve across all employee
groups with record scores in our most recent
employee survey. Turnover has also continued
to improve, reaching record lows of 64% (FY
2023 81%), meaning that we are retaining our
talent, building more experienced teams, and
reducing the cost associated with the induction
and training process. In addition, our internal
succession rates have increased with 61% of
General Manager positions filled internally
(FY 2023 53%), reflecting our commitment to
team member progression and development.
Apprenticeships continue to be an integral
part of our retention and succession strategy,
with evidence that people who complete
apprenticeships are more likely to stay with
us and to be promoted. We remain committed
to delivering high quality apprenticeship
opportunities both to new starters and existing
employees and welcomed over 1,600 new
joiners to the programme this financial period.
We are particularly proud of our culinary
apprenticeships, which continue to receive
excellent feedback from learners, providing
a pipeline of talent to a more challenging area
for recruitment, as well as a valuable career
opportunity with above industry level
enrolment for 19–24-year-olds. We are
delighted that our apprentice programmes
were recognised at the December 2023
National Apprenticeship awards, winning
the award for Best Large Employer.
Sustainability
We are committed to reducing the
environmental impact of our business and
the Board has challenging targets to drive
continued momentum in this area. We have
committed to:
• Net Zero emissions by 2040, including
Scope 1, 2 & 3
Progress: During the year we reduced our
emissions by 14% from our 2019 baseline
year, a year-on-year improvement of 3 ppts.
Scope 1 & 2 emissions reduced from the
baseline by 18% (FY 2023 13%) driven
primarily by the energy consumption
reduction initiatives, and the systematic
removal of gas from the estate. In the year
we have made good progress in our efforts
to reduce gas as an energy source with
60 electrified kitchens, and five sites where
gas has been fully removed, and replaced
by air source heat pumps as an alternative
for heating. We have plans to considerably
expand this programme in FY 2025. Scope 3
emissions reduced by 14% with significant
progress made in the reduction of emissions
associated to the products we buy, including
food, as well as transport emissions in our
supply chain.
• Zero operational waste to landfill by 2030
Progress: We now divert over 98% of waste
from landfill and are confident of achieving
our target ahead of 2030. In addition, we
have maintained recycling rates at 59%
with enhanced segregation and a focus on
engagement and behaviour change in sites.
• 50% reduction in food waste by 2030
Progress: We have successfully reduced our
food waste by 23% from our 2019 baseline,
with progress both in sites and in the supply
chain. We are focused on operational
practices to reduce waste, and have
effective partnerships in place with
Fareshare and Too Good To Go to
redistribute unavoidable surplus food.
Our sustainability strategy also has a strong
focus on the positive impact we have on
people and communities, and we are proud
to partner with Social Bite, a homelessness
charity. Of particular importance is the Jobs
First programme, helping people back to
independence through long-term employment
opportunities, which to date has employed
26 people from their academy. This year we
funded the establishment of a new role within
Social Bite, focused solely on placing people
impacted by homelessness into Mitchells &
Butlers roles and supporting them for the first
year of employment. We see considerable
scope to grow this partnership and enhance
our positive social impact over the coming years.
Current trading and outlook
Sales growth remained strong over FY 2024,
with consistent market outperformance. As we
move into FY 2025 we expect more normalised
levels of sales growth as the inflationary
environment eases. The current underlying run
rate of like-for-like sales
a
growth, as measured
across the first seven weeks of the new
financial year, is 4.0%.
Cost headwinds are now anticipated to total
c.£100m this financial year, an increase of just
over 5% on our current cost base. Against a
benign backdrop of general inflation
(including food and drink inputs), by far the
most significant increase is now expected to be
in relation to labour costs due both to increases
in the statutory National Living Wage and in
the recently announced increase in Employer
National Insurance contributions, both of
which take effect from April 2025. We
anticipate that energy costs this year, of which
just over one half have been bought forward,
will broadly stabilise overall with no further
deflation, as has been seen in FY 2024.
Notwithstanding future cost increases we feel
that the business is in very good shape. Our
balance sheet continues to strengthen, with
reduced debt and a substantially de-risked
pension surplus, and we expect to outperform
the market driving further profit growth in
the year ahead.
Phil Urban
Chief Executive
Mitchells & Butlers plc
a. The Directors use a number of alternative
performance measures (APMs) that are considered
critical to aid the understanding of the Group’s
performance. Key measures are explained on pages
186 to 189 of this report.
b. CGA Hospitality Market Monitor, August 2024.
c. Asda Income Tracker
22 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Other InformationFinancial StatementsGovernance
Introduction
Strategic Report
Mitchells & Butlers plc Annual Report and Accounts 2024 23
Our markets
Trading in the eating-out sector has remained
resilient during a challenging period for the
consumer.
Performance across the market over the period
reflects resilience amid challenging conditions,
particularly high inflation, the cost-of-living
crisis, and fluctuating consumer confidence.
The persistent inflationary environment has
continued to put pressure on both businesses
and consumers and while the worst of the
pandemic-related disruptions have eased, the
rising costs in food supply chains, energy, and
labour which followed have impacted margins.
The resulting increase in prices across the
industry has made eating out a more considered
choice for many households and the
culmination of these pressures has been net
closures of 1% from June 2023 to June 2024
a
.
Despite these pressures, Lumina reported
sales growth in the pubs, bars and restaurants
market of 1.5% in 2024, with managed groups
outperforming and delivering growth of 2.9%
b
.
With positive indications of increasing
disposable income in recent months as
inflationary pressures on households ease
(Asda Income Tracker
c
) sales growth for the
sector is expected to remain resilient in the year
ahead with forecast growth for managed pubs,
bars and restaurants of 2.6%.
We have identified five key Consumer Trends
evolving in the post-Covid world which we
believe will shape the future development
of the market:
a. Value Scrutiny
As a result of the cost-of-living squeeze, the
consumer is ever more precious about their
leisure time and how they spend their leisure
pound. Frequency of visit is down, but when
people are out, they are willing to opt for
a premium experience, but are less forgiving
when the operator gets things wrong.
The other component of value is of course
price; it is therefore critical to remain structured
and systematic in the way we take price by
product and by business, with decisions based
on regular peer group price surveys, remaining
acutely aware of market and product
relativities, and on price elasticity.
b. Premiumisation & Experience
The second key trend we see is around
premiumisation and experience, which
recognises the growing importance of quality
in all that is done for the guest and the need
to provide a better overall experience, not just
stopping at good food and beverage. Having
a great environment and great standards has
never been more critical to success. We believe
that successful operators will be those that
have the courage and financial capability to
invest to transform the image of their offers,
premiumising as they do so, and driving higher
spend as a consequence.
However, premiumisation and experience are
not solely about capital, it is also about having
the operational ability to design experience-led
events and offers that appeal to a more
discerning guest.
c. Technology & Data
The third key trend that we see is around the
use of technology and data. It is fair to say that
we have never had as much access to data as
we do today, and our guests have never been
more comfortable engaging with technology
than they are today.
The challenge is to use that data to personalise
communication with our guests, and to
improve their interaction with technology
platforms. To achieve this, there will need to be
continual investment in ever-more sophisticated
CRM systems.
d. Health & Wellbeing
The fourth key trend we see is around health
and wellbeing, which has been a theme
for several years, but which we believe will
continue to strengthen. Consumers are
increasingly interested in, and knowledgeable
about, nutrition and in managing their weekly
approach to diet. We do not believe that this
means that people will reject alcohol, red meat,
and desserts but they do want to know what
they are consuming and want to have choice
throughout the week.
24 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
0
-10
-20
-30
-40
-50
-60
-30
-24
-22
-19
-21 -21
-19
-17
-14
-13 -13
-21
-20
Oct
23
Nov
23
Dec
23
Jan
24
Feb
24
Mar
24
Apr
24
May
24
Jun
24
Jul
24
Aug
24
Oct
24
Sep
24
20
15
5
10
0%
-5
-10
-15
-20
12%
13%
Jan
21
Apr
21
Jul
21
Oct
21
Jan
22
Apr
22
Jul
22
Oct
22
Jan
23
Apr
23
Jul
23
Oct
23
Jan
24
Apr
24
Jul
24
Sep
24
e. Sustainability & Conscientious
Consumption
The final trend that we see is around
sustainability and conscientious consumption.
There is no doubt that sustainability has risen
sharply in terms of awareness across the UK,
but currently there is less evidence yet of a
change in behaviour of our guests in terms of
how they spend their money, and certainly less
appetite to pay for more sustainable choices.
However, this trend is growing and we feel that
we need to keep progressing, as the consumer
will, at some time in the future, start to favour
those businesses that are ‘greener’ across
the spectrum.
Looking ahead, the market’s outlook remains
cautiously optimistic. While economic
conditions are likely to remain challenging
in the short term, continued innovation in
menu offerings, sustainability, and digital
transformation will be critical in driving
long-term growth. Operators that can balance
cost pressures with consumer demand for
affordability and experience will be well-placed
to capitalise on opportunities in the coming
years. Longer term, Lumina Intelligence
c
forecasts that the UK Eating Market will
grow at c.2.4% p.a. over the next three years.
Whilst they use a broad market definition,
with coffee shops and fast- food predicted
to be the leaders, Lumina also acknowledges
that branded restaurants will continue to
outperform, at the expense of independent
operators in particular.
In conclusion, the UK eating out market in
2024 reflects a sector that is adapting to both
economic constraints and evolving consumer
preferences. With resilience, innovation, and
a focus on sustainability, the market has the
potential to remain a vibrant part of the
UK economy.
Our response to this competitive environment
can be seen on pages 34 and 35 in our strategic
priorities.
Sources:
a. CGA Hospitality Monitor, August 2024.
b. Lumina Intelligence UK Menu & Food Trends Report
December 2023.
c. Asda Income Tracker, September 2024.
UK Consumer Confidence Index
Asda Income Tracker (year-on-year percentage change)
Source: GfK Consumer Confidence Index
Source: Asda Income Tracker July 2024
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 25
Strategic Report
In this section, we outline the distinctive
characteristics of Mitchells & Butlers that enable
us to create value for our stakeholders – be they
financial, structural, environmental or cultural.
Our business model
The Mitchells & Butlers difference
Financial
• Long-term transfer of value to equity
as debt is paid down
• Strategy designed to generate sustainable
growth and to provide flexibility in
uncertain trading environments
Financial review
Go to pages 56 to 58
Structural
• Our diversified portfolio of leading brands
and offers caters for various demographics
and disposable income levels making us
less susceptible to short-term changes
to industry trading conditions
• We are a predominantly freehold
business with well-invested properties
• As one of the largest operators we benefit
from economies of scale driven by our
central functions
• We understand our guests and have the
systems in place to receive and react to
their changing needs to evolve our offers
At a glance
Go to pages 2 to 5
26 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Environmental
• Our sustainability strategy is designed
to create a positive effect on people and
communities and to reduce the negative
effect of our operations on the environment
Our sustainability targets
Go to pages 38 and 39
The Mitchells & Butlers difference
Cultural
• We have a defined purpose
supported by our PRIDE
(Passion, Respect, Innovation,
Drive, Engagement) values
• Our people strategy encompasses
a structured approach to
recruitment, retention,
development and engagement
• We have a team of dedicated,
knowledgeable and capable
people who are critical to
delivering outstanding
experiences to our guests
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 27
Strategic Report
1
4
5
Our business model is driven by our understanding
of our guests and our ability to evolve our brands
and offers to reflect changes in their needs.
Our business model
How we create value
Our experience and
ability to interpret
guest feedback help
us understand what
our guests want.
Creating memorable
moments generates
value for stakeholders.
Suppliers Guests Employees
Critical to the delivery of our offers is the
quality of our people, supply chain, estate
and central functions, which provide the
infrastructure through which our brands
deliver memorable moments to our guests.
Our success in creating these moments
consistently, safely and profitably creates
long-term value for our stakeholders.
Amenity
Safety
Choice
Hygiene
Environment
Value
Occasion
Everything we learn about our
guests’ requirements is fed back.
28 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
2
3
Everything we do is…
Run by our people…
+50,000*
Employees
* As at 28 September 2024.
Local community Environment Investors
Supplied by our supply chain…
+1,800
Suppliers
Realised within our estate…
1,726
Pubs, bars and restaurants
Supported and
managed by our central
functions…
• Finance and Technology
• Human Resources
• Legal and Risk
• Marketing
• Procurement
• Property
Understanding
what our guests
want influences
every element
of our brands
and offers.
The combination of our brands, people, supply chain, estate
and central functions creates memorable moments for our guests.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 29
Strategic Report
Value creation story
FY 2024 highlights
Our annual supplier conference allows
us to communicate our business and
sustainability priorities direct to our
suppliers
Our centralised procurement team
has developed strong relationships
which have enabled us to minimise the
impact of any supply chain disruptions
Donated unavoidable surplus food in
the supply chain in partnership with
FareShare
4.5
Online review score of over 4.5 out of 5
across the business
99.6% of outlets with safety scores
of 4 or 5 out of 5
Our suppliers provide the products which bring
our brand visions to life. Our guests’ tastes are
continuously evolving and our ability to meet
changing preferences at scale sets us apart
from our competitors.
We build long-term and collaborative
partnerships with our suppliers. We work
closely with suppliers to ensure the needs
of both businesses are met, and to ensure
relationships are maintained. By working
together, we can develop new and innovative
products with suppliers which help our
brands adapt and evolve, building both of
our businesses. Through these partnerships,
we work to maintain transparency about
our payment terms.
We work with suppliers to understand the
environmental impact of our supply chain and
to minimise the negative impact of production
and transportation. We are working to ensure
that all our suppliers can support our
sustainability ambitions, including prioritising
high animal welfare standards. Further detail
on our sustainability strategy can be seen on
pages 38 and 39.
GuestsSuppliers
30 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
The satisfaction and enjoyment of our guests
is critical to the success of our business. We
always aim to exceed guests’ expectations and
continually evolve our offers with that objective
in mind.
We collate guest feedback through online
channels and via our brand surveys which
is reviewed centrally and used to provide
valuable insight to both our operations and
brand marketing teams.
We have always strived to achieve high safety
and hygiene standards and have used this
strong base to evolve our ways of working for
the challenges we face. We focus on ensuring
high-quality, consistent practices across
the business. We constantly review the new
procedures to ensure that both high safety
levels and guest satisfaction can be achieved.
As ever, high-quality food and drink, served by
an engaged team, in an appealing environment
remain key elements to providing our guests
with memorable experiences, alongside the
highest safety standards. We regularly assess
changing guest preferences across these areas
to position our brands for success.
Guests Employees
We are proud of the learning and development
opportunities we offer and strive to provide
progression opportunities to all our people.
Over the past year we have increased the
number of people promoted internally,
particularly at the frontline.
Regular development catch ups are held
throughout the year to support employees’
progression and personal development.
We have two formal feedback surveys a year
providing the opportunity to gain insight
into employee satisfaction and to highlight
opportunities to improve our offer as an
employer.
Employee forums are hosted by the Executive
Committee team members and enable
all employees to raise issues via elected
representatives, giving them the opportunity
to directly discuss any issues.
The welfare of our employees is of paramount
importance to us and we continually review
the support we offer to employees across
the business.
Dave Coplin, an independent Non-Executive
Director, is the nominated Board member
responsible for representing the employee
voice at Board level.
We are committed to providing equal
opportunities for all our employees. Our
employee Diversity and Equality Policy ensures
that every employee, without exception,
is treated equally and fairly and that all our
employees are aware of their responsibilities.
Growing and developing our internal
talent is a priority to address talent
shortages
Innovative recruitment and attraction
solutions ensuring the right people
join our business
Employee wellbeing has never been
more important
The following table sets out our diversity
balance between men and women at the end
of FY 2024.
Men Women
Board Directors 7 2
Other senior managers 30 13
All employees 24,346 26,462
Our people are central to our business,
bringing brand visions to life through engaging
interaction with our guests and preparation
of high-quality food and drink.
Through our open and inclusive culture,
we aim to create an environment which allows
our people to develop and grow. Recruiting
effectively is important as it ensures that we
attract the right people that will thrive in our
organisation. Increasingly, technology can be
helpful in supporting our recruitment activity,
and enables us to market our job opportunities
effectively in a very competitive environment.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 31
Strategic Report
Value creation story continued
Developed a nutritional roadmap
focused on enhanced information
and balanced choices
£159m
tax paid in FY 2024 (not including tax
collected, e.g. VAT)
Worked with Social Bite to help
provide employment to vulnerable
people on their Jobs First programme
Over 110 tonnes of unavoidable
surplus food donated to charities via
FareShare during the last five years
Investment in FY 2024 in
energy-reducing technology
98%
of operational waste diverted from
landfill in FY 2024
Target to reduce our absolute Scope 1
& 2 GHG emissions by 70% by 2030 vs
2019 and our absolute Scope 3
emissions by 28% over the same
time frame
23%
Food waste reduction in
FY 2024 vs 2019 baseline
Committed to achieving Net Zero
emissions by 2040
We have a long history of providing a central
hub to many communities where people have
met and socialised for decades.
Many of our brands are long-standing
supporters of causes which resonate with the
brand and its guests. For example, All Bar One
supports Shelter with selected dishes including
a donation, and Toby Carvery supports the
Armed Forces.
We are actively looking to enhance the positive
impact we can have on local communities,
including supporting charities, providing
career opportunities, encouraging responsible
drinking, and supporting health by enhancing
and providing information on the nutritional
content of our meals.
EnvironmentLocal community
32 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
The natural environment provides the business
with the resources it needs to operate. We take
our responsibility to protect that environment
seriously and have set stretching targets to
reduce the negative impact of our business.
We have aligned our objectives with the UN
Sustainable Development Goals in order to
focus our efforts on the global priorities. Our
aim is to embed a sustainable way of doing
business within our current operations such
that it becomes business as usual and we are
doing that through a Board-level committee,
steering committee and focused workstreams
with representatives from across the business.
The food industry has an important part to play
in climate change, as food supply chains are
a significant factor in rising greenhouse gas
emissions and in the reduction of biodiversity.
We have measured our baseline emissions
and have used this to create a roadmap for
reduction which is one of our priority areas.
We are also conscious of the food industry’s
significant impact on biodiversity which
is another area we are balancing within our
future plans to reduce the negative impact
our organisation has on the environment
and to enhance the positive outcomes
wherever possible.
Further detail of our sustainability strategy
can be found on pages 38 and 39.
Environment Investors
We maintain an open dialogue through our
investor relations programme. We update
investors and bondholders on financial
and strategic performance through regular
performance updates and facilitate discussion
through meetings, roadshows and our Annual
General Meeting.
Board-level committees ensure that
appropriate time and focus are allocated to the
key areas of governance of the business and,
where necessary, expert third parties are
consulted. The Board provides a healthy
level of challenge and debate on key areas and
has been successful in moving the business
forward.
The Executive Committee consists of members
of management from across the business who
have a wealth of experience both within the
hospitality industry and from other sectors.
Their biographies can be found on our website
at www.mbplc.com/investors/our-
management.
We recognise that it is important that our
investors have transparency over the operation
of our business and the full details of our
governance procedures are set out on pages
75 to 87.
Robust financial management through
challenging macro-economic conditions
Equity raise in FY 2021 gave strength
to balance sheet
Reporting on environmental, social
and governance issues enhanced
Our investors are made up of our shareholders
and bondholders who play an important role in
monitoring and safeguarding the governance
of the Company.
We aim to demonstrate the responsible
stewardship of the Company from a financial,
strategic, governance, environmental and
ethical perspective. We have a highly effective
Board, with Directors with various specialisms
and backgrounds to best govern the Company.
Their biographies can be found on pages 64
and 65.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 33
Strategic Report
Our strategic priorities
Maintaining our consistent three strategic priorities
Consistent focus on our strategic priorities has enabled
the business to continue to generate sales growth
ahead of the market as well as cost efficiencies
Our strategic priorities are the pillars which
underpin the activity within the business
to drive long-term sustainable growth and
ultimately that enable us to achieve our
purpose of being the host of life’s memorable
moments, bringing people and communities
together through great experiences. Through
building a strong and efficient business we are
able to focus on providing experiences which
our team and guests enjoy being a part of,
including processes which are sustainable and
aim to bring people together throughout our
supply chain. We have maintained consistency
in our three strategic priorities over recent
years and believe that continued focus in these
areas is key to retaining stability and driving
growth in the business. Our three strategic
pillars are:
• Build a more balanced business
• Instil a more commercial culture
• Drive an innovation agenda
Focusing on these areas through our Ignite
programme of work, a wide range of
management improvement initiatives delivered
significant progress, generating sustained
like-for-like sales
a
growth and cost efficiencies.
The third wave of Ignite initiatives has continued
this progress and planning sessions for the
fourth wave have taken place during the year
with plenty of new initiatives to continue the
momentum. We continue to focus on initiatives
which enhance efficiency and productivity,
in areas such as automatic product ordering,
enhanced labour scheduling, cost-mitigating
procurement strategies and energy
consumption reduction. Alongside efficiency
improvements, we have a number of projects
designed to drive sales, with focus on enabling
our teams to deliver exceptional guest
experiences alongside digital development
designed to enhance the guest experience
as well as the effectiveness of our marketing
strategies. We remain confident in our ability
to deliver long-term and sustained efficiencies
and business improvements through the
existing Ignite programme.
We believe that our three strategic pillars
remain the crucial elements of the business
which will drive long-term growth. Through
the Ignite workstream and our capital
programme, we will continue to unlock value
in these areas, enhancing our competitive
position in the market.
The table on page 35 outlines these strategic
priorities, our progress against them in FY
2024, our priorities for FY 2025 and their link
to our sustainability strategy, risks and KPIs.
“We have maintained
consistency in our three
strategic priorities over
recent years and believe
that continued focus in these
areas is key to retaining
stability and driving growth
in the business.”
a. The Directors use a number of alternative
performance measures (‘APMs’) that are considered
critical to aid the understanding of the Group’s
performance. Key measures are explained on pages
186 to 189 of this report.
34 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
1. Build a more
balanced business
2. Instil a more
commercial culture
3. Drive an
innovation agenda
• To effectively utilise our estate of largely freehold-
backed properties
• To ensure we are exposed to the right market segments
by having the optimal trading brand or concept in each
outlet, based on location, site characteristics and local
demographics
• To maintain the amenity level of the estate such that we
operate safely, reduce our impact on the environment
and remain competitive to guests, alongside meeting
cashflow commitments
• To empower teams across the business to make
changes to facilitate sustainable growth
• To engage our teams in delivering outstanding guest
experiences
• To act quickly and decisively to remain competitive
in our fast-changing marketplace
• To provide training and development opportunities
which allow our people to thrive within the business
• To enhance processes to address Modern Slavery
threats in the supply chain
• To ensure that our brands and formats remain fresh
and relevant within their market segments
• To leverage the increasing role technology can play
in improving efficiency and guest experience
• To execute a digital strategy to engage with consumers
across a variety of platforms
• To facilitate new product and concept development
• To utilise our scale and position to lead on environmental
issues which impact our sector, finding innovative
solutions to pressing issues
FY 2024 progress
• Capital expenditure at £154m
• Completed 189 conversions and remodels, and acquired
four new freehold and two new leasehold sites
• Expanded our competitive socialising darts concept,
Arrowsmiths, across 10 sites providing a strong return
from secondary space
• Acquisition of Pesto Restaurants Ltd, delivering Italian
Tapas offer across its ten strong estate. Pesto
complements the Mediterranean theme of Ego;
together these brands provide further diversification
of the estate with a low meat offer which appeals to
the health-conscious guest
• Conversion to Ego, acquired in FY 2023, continues with
31 sites within the brand and strong sales uplifts
following conversion
• We are committed to re-establishing a seven-year
investment cycle and this continues to be a key focus
for the business
FY 2024 progress
• Launched a ‘Guest Obsessed’ programme to enhance
the skills of our teams and provide exceptional guest
experiences with a focus on driving sales, delivering
record guest review scores
• Successful implementation of a new dish availability
system has improved menu availability which has a
significant impact on guest experience
• Continue to train and develop our people, celebrating
550 apprenticeships completed in the year, and internal
succession to General Manager roles increasing to 61%
• Focus on employee engagement resulting in record
engagement scores across all employee groups and
turnover reduced to 64%
FY 2024 progress
• Successfully deployed ‘My Account’ across multiple
brands, providing guests a single platform to manage
their bookings, orders and offers. Resulting in notable
rise in customer engagement, particularly among
younger guests, and positions ‘My Account’ as a key
platform for future interactions
• Our websites and apps were redesigned with a fresh
look and improved functionality, leading to higher
conversion rates. The new design has enhanced the
overall user experience, making our digital platforms
more engaging and intuitive
• A pre-order system for Christmas was introduced,
automating what was previously a manual process.
This has provided guests with a more streamlined and
efficient experience, while also reducing operational
complexities during a busy time of year
• We expanded our marketing efforts by adopting new
social media platforms and introducing personalised
website content, improving how we target and engage
with different customer segments
FY 2025 priorities
• There is a full capital programme planned for FY 2025
• Focus on enhancing asset value through remodelling
sites where we believe increased value can be unlocked
• Make selective acquisitions where we feel they add
value to the estate, and disposals where we feel we
have extracted maximum value
• Continue to realise conversion opportunities within
the estate to the Ego format and begin to expand Pesto
• Invest in technologies, such as solar panels and
internet-connected control devices, to improve the
energy efficiency of our estate
• Continue to maximise the utility of the secondary
spaces across the estate via a dedicated Ignite initiative
FY 2025 priorities
• Adapt to the changing environment within which we
operate to maximise the profitability of each business
• Deliver a wide range of cost control initiatives across
the estate under the Ignite programme including
range management to deliver lower-cost alternatives
• Unlock the full benefits of automated team member
scheduling in every business
• Expand the trials of internet-connected control devices
for heating systems and kitchen equipment to reduce
energy consumption
• Increasingly leverage scale through central procurement
and benchmark our businesses
FY 2025 priorities
• Building on the success of ‘My Account’, we will trial
more advanced points-based loyalty schemes to further
incentivise repeat customer engagement and
strengthen brand loyalty
• Extend digital gamification across more brands,
enhancing customer interaction and engagement
• Our CRM platform will be upgraded to enable better
data management, deeper customer insights, and more
tailored marketing communications, ensuring we stay
competitive in personalisation and customer relationship
strategies
• Further enhancements to our ordering and booking
platforms, focusing on improving speed, reliability, and
the overall customer experience to meet the evolving
expectations of our digital audience
Sustainability
• Enhancing the sustainability credentials of our buildings
is a key priority
• During the year we have installed solar panels on 151
sites producing on-site renewable electricity and have
plans to continue this programme into FY 2025
• Removing gas as an energy source from our sites is a key
objective of our Net Zero roadmap. We now have 60
sites with all-electric kitchens and five sites where we
have fully removed gas in favour of renewable electricity
• We have a team of sustainability ambassadors across the
business who have helped to drive behavioural change
resulting in reduced energy consumption; coupled with
investment in energy reducing technology we have
reduced consumption by 2% during the year
• We divert 98% of our operational waste from landfill and
are focused on reducing overall volumes of waste whilst
increasing recycling rates
Sustainability
• We communicate our sustainability ambitions on all
brand websites and have built our communication on
these topics through social media in appropriate brands
• We have made good progress in reducing food waste,
down by 23% in FY 2024 from FY 2019 baseline,
facilitated through enhanced practices and partnerships
with Fareshare and Too Good To Go to redistribute
unavoidable waste
• We are working in collaboration with our waste
management providers and suppliers to reduce
the amount of waste generated by the business
• Continue our work with Stop The Traffik to drive best
practice in addressing Modern Slavery threats in the
supply chain
• We are expanding our programme with Social Bite to
help provide employment to support people impacted
by homelessness by funding a Social Bite support
worker dedicated to placing people impacted
by homelessness into Mitchells & Butlers roles
Sustainability
• Around 18,000 people have completed our training
on sustainability designed to enhance understanding
of sustainability challenges
• We have active and ongoing discussions with
our suppliers on innovative ways to reduce the
environmental impact of our supply chain
• Our food development teams are exploring ways
to reduce the environmental impact of our menus
• We are active members of the Zero Carbon Forum,
a cross-industry group which is focused on finding
solutions to help hospitality transition to a low carbon
economy
• We have representation on the Hospitality Sector
Council Sustainability Group, making us part of the
conversation with government for future legislative
changes to support enhanced sustainability in the sector
Links to Key Risks
1, 2, 3, 7, 8, 10, 11, 12, 14
See pages 46 to 52
Links to Key Risks
1, 2, 3, 6, 7, 8, 10, 11, 12, 14
See pages 46 to 52
Links to Key Risks
1, 2, 4, 5, 7, 10, 11, 12, 14
See pages 46 to 52
Links to KPIs
2, 3, 4, 5
See pages 36 and 37
Links to KPIs
1, 2, 3, 5
See pages 36 and 37
Links to KPIs
2, 3, 5
See pages 36 and 37
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 35
Strategic Report
64%
56%
58%
94%
81%
2020 2021 2022 2023 2024
4.5
4.2
4.3
4.3
4.4
2020 2021 2022 2023 2024
5.3%
-3.5% -9.6%
1.1%
9.1%
2020 2021 2022 2023 2024
1.
Staff turnover
Definition
The number of leavers in our retail businesses,
expressed as a percentage of the average
number of retail employees. This like-for-like
measure excludes site management. The
turnover measurement gives an indication
of the retention of retail staff and can help to
identify if there is an arising retention issue in
any area of the business which could highlight
an engagement issue. In addition, as team
members go through a thorough induction
and training process there is an element of
cost for each person who leaves the business.
Therefore, it is important for the Board to
monitor this measure.
FY 2024 performance
Retail staff turnover reduced by 17 ppts to 64%
during the year due to the effective delivery
of our people promise, to meet the needs of
our employees, driving improved retention.
The reduction in turnover reflects improved
stability and experience of teams across all
levels. During FY 2020 and 2021, turnover was
suppressed by the impact of Covid-19 as there
were minimal leavers during closure periods.
Link to strategic priority: 2
See page 35
2.
Guest review score
Definition
Our reported guest measure is an average
feedback score across the major third-party
feedback channels such as Google, Facebook,
Tripadvisor and other review sites. Improving
this score remains a key focus of the business
as we aim to create memorable moments for
our guests.
FY 2024 performance
Our average feedback score across all major
feedback channels was 4.5 out of 5 for
FY 2024, an improvement on prior year of 0.1.
We are delighted with the significant progress
made in recent years on guest feedback, which
reflects the satisfaction of our guests. Progress
has been made over the year, driven by
a collection of Ignite projects focusing on
improving this metric and our managers’
continued commitment to delivering excellent
guest experiences.
Links to strategic priorities: 1, 2 & 3
See page 35
3.
Year-on-year same outlet
like-for-like sales
a
Definition
Sales in FY 2021 and 2022 were impacted by
Covid-19 related closures, therefore during
these years sales were compared to the sales
in FY 2019, being the last full year pre-Covid-19.
Since FY 2023 the measurement has reverted
to using the prior year as a comparative for all
UK managed sites that were trading in the
two periods being compared, expressed as a
percentage. Like-for-like sales is an important
indicator of how the business is performing
in the context of its previous performance,
the long-term trend of which can reflect
improvements in guest appeal.
FY 2024 performance
Like-for-like sales increased by 5.3% in FY 2024,
with strong trading throughout the year and
all brands in like-for-like sales growth. Sales
growth remained consistently ahead of the
market as measured against the CGA Business
Tracker.
Links to strategic priorities: 1, 2 & 3
See page 35
Key performance indicators
Measuring performance
We measure our performance against our strategy
through five key performance indicators.
Staff turnover
64%
Guest review score
4.5
Year-on-year same outlet
like-for-like sales
a
5.3%
36 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
19%
6%
-0.8%
18%
19%
2020 2021 2022 2023 2024
£312m
£99m
£29m
£240m
£221m
b
2020 2021 2022 2023 2024
4.
Incremental return on
expansionary capital
a
Definition
Expansionary capital includes investments
made in new sites and investment in existing
assets that materially change the guest offer.
Incremental return is the growth in annual site
EBITDA, expressed as a percentage of
expansionary capital. It is important for the
Board to monitor return on investment as it
indicates the success of the capital programme
which underpins one of our three key strategic
pillars, to build a balanced business.
FY 2024 performance
The EBITDA return on all conversion and
acquisition capital invested over the last four
years was 19%. We remain confident in the
quality of the investment programme and
committed to the re-establishment of a
seven-year investment cycle. Our capital
programme continues to be a key focus of the
business and one which we believe will deliver
significant future value.
Link to strategic priority: 1
See page 35
5.
Adjusted operating profit
a
Definition
Operating profit before separately disclosed
items as set out in the Group Income
Statement. Separately disclosed items are
those which are separately disclosed by virtue
of their size or incidence. Excluding these items
provides both management and investors with
useful additional information about the Group’s
performance and supports an effective
comparison of the Group’s trading performance
from one period to the next. The Board
monitors adjusted operating profit as one of the
financial health indicators, as it helps to reveal
how efficiently the business is being operated.
FY 2024 performance
Adjusted operating profit
a
of £312m was £91m
higher than the prior period, on a 52-week
basis. Strong sales performance and enhanced
operating efficiency as well as easing cost
inflation during the year resulted in notable
profit growth for the period.
Links to strategic priorities: 1, 2 & 3
See page 35
a. The Directors use a number of alternative
performance measures (APMs) that are considered
critical to aid the understanding of the Group’s
performance. Key measures are explained on pages
186 to 189 of this report.
b. 52-week basis.
Incremental return on
expansionary capital
a
19%
Adjusted
operating profit
a
£312m
4.5 out of 5
Average guest review score
19%
Incremental return on expansionary capital
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 37
Strategic Report
Our sustainability targets
The focus areas of our strategy were determined by a materiality
assessment informed by stakeholder engagement
We have been working on enhancing the
sustainability of our operations since 2019 and
are pleased with the progress we have made.
We believe that embedding sustainability skills
into our existing teams is essential in order to
generate the changes needed to reduce the
environmental impact of the business.
Therefore, building knowledge across the
organisation such that sustainability can be
considered in each business decision has
remained a key focus during the year. The
Sustainability Steering Committee oversees
the development and progress of the Company
strategy, supported by three working groups
aligned to the three pillars of the strategy.
The Board provides challenge and insight
and is regularly updated on progress, and team
members across the business receive
communication on key initiatives to drive
engagement and enhance understanding
of our objectives.
Our strategy has been developed to align with
the issues addressed by the UN Sustainable
Development Goals and Paris Climate
Agreement. We have committed to reducing
the negative impact of our business model on
the environment in light of these objectives and
look for opportunities to enhance our positive
impact on society. Our Net Zero ambition
has been developed to align with the Science
Based Targets initiative (SBTi) methodology
to keep global warming well below 2°C,
and our roadmap was validated by the SBTi
in January 2024.
We have identified the UN Sustainable
Development Goals which we believe we can
have the greatest impact on and have aligned
these to our strategic pillars as shown below.
For each of the pillars we have defined our
objective, key actions and targets.
Collaboration across our industry and value
chain is essential in order to facilitate progress;
we are members of industry groups such as the
UK Hospitality Sustainability Committee and
Zero Carbon Forum, to share best practice with
the intention of moving the industry forward
as a whole, and we are also represented on
the Hospitality Sector Council.
Details of the link between our sustainability
strategy and our strategic pillars can be seen
on page 35.
We remain focused on reducing the environmental
operations of our business and are pleased with the
progress made during the year.
Sustainability strategic pillars
1. Respect for the planet 2. Pride in our offers 3. Care for communities
Objective
We are committed to reducing our emissions, tackling
waste and protecting biodiversity
Objective
We strive to deliver responsibly-sourced products and
menu options for everyone
Objective
People are central to our business; we are focused on
supporting our teams and the communities we serve
Key actions
• We have made progress against our Net Zero roadmap,
which was built in collaboration with third-party
experts, providing a detailed plan for decarbonisation
• We received validation for our Net Zero roadmap
from Science Based Targets initiative
• We are a founding and active member of the Zero
Carbon Forum, bringing the industry together to
reduce emissions across the sector through shared
learning and insights
• We continue to purchase 100% renewable electricity
• We continue our solar panel roll out, with 151 sites
now completed, allowing us to generate on-site
renewable energy
• We have successfully removed gas as an energy
source for cooking, heating and hot water in five
sites providing essential learning for the future
scaling of this initiative
• We have successfully converted 60 kitchens from
gas to electricity
• We have increased the proportion of operational
waste diverted from landfill to 98% (FY 2023 97%)
• We have maintained our recycling rate at 59% (FY
2023 59%), through team engagement and working
with suppliers on more sustainable packaging
Key actions
• We continue to evolve our menus to support our
ambition of reducing food emissions
• We work with suppliers across all categories
to understand and improve the environmental
credentials of the products we buy
• We have enhanced our animal welfare requirements
from suppliers
• We engage with suppliers on sustainability through
our procurement managers and at our annual
supplier conferences
• We have maintained our focus on enhancing
the nutritional balance and information available
on menus
• We source all direct palm oil purchases from
Rainforest Alliance Approved sources
Key actions
• We have developed a partnership with Social Bite,
a charity tackling homelessness
• We have expanded our employment programme
with Social Bite, supporting vulnerable people back
into employment
• We raised £211k for Social Bite through Festival
of Kindness, a campaign which facilitates donations
across all of our sites
• We have an enhanced employee wellbeing strategy
and improved resources and tools available to
employees
• We maintain oversight of our Modern Slavery policy
with risk assessment completed, in partnership with
Stop the Traffik
UN Sustainable Goal alignment UN Sustainable Goal alignment UN Sustainable Goal alignment
38 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Our targets
1. Net Zero greenhouse gas
emissions by 2040
2. Zero operational waste
to landfill
3. Food waste
Target
Achieve Net Zero greenhouse gas emissions by 2040
(absolute reduction of emissions, including Scope 1, 2
& 3) from our FY 2019 baseline. We align our definition
of Net Zero to the Science Based Targets initiative
corporate standard. Our Net Zero target includes our
Scope 1, 2 & 3 emissions, using an operational control
approach. We have set a near-term target (validated by
SBTi) to reduce our absolute Scope 1 &2 GHG emissions
by 70% by 2030, compared to a 2019 base year (aligned
to well below 2°C) and a target to reduce our absolute
Scope 3 emissions by 28% over the same timeframe.
We have also set a long-term target (validated by SBTi)
to reduce absolute GHG emissions from Scopes 1, 2 & 3
90% by 2040 from a 2019 base year to be Net Zero
by 2040. Aligned to the SBTi criteria we will offset our
residual 10% emissions using carbon removal offsets
at our Net Zero date. During FY 2024 we will recalculate
our baseline and reduction pathway to align with the
Forest, Land and Agriculture (FLAG) guidance.
Target
Zero operational waste to landfill by 2030.
Target
Reduce food waste by 50% by 2030 from our FY 2019
baseline.
Performance
Our Scope 1, 2 & 3 greenhouse gas emissions have
decreased by 14% against our FY 2019 baseline in
FY 2024. This reduction is primarily driven by reduced
energy consumption, reduced reliance on gas as a fuel
source in our businesses and a reduction in the
emissions associated to the products we buy. On an
intensity basis of emissions to turnover our output of
emissions has reduced by over 4.1% from prior year.
Total Scope 1 & 2 emissions reduced from the baseline
by 18% (FY 2023 13%) driven primarily by the energy
consumption reduction initiatives delivering 2%
reduction, and the systematic removal of gas from
the estate. In the year we have made good progress
in our efforts to reduce gas as an energy source with
60 electrified kitchens now in place, and five sites where
gas has been fully removed and replaced by air source
heat pumps as an alternative for heating. We have plans
to considerably expand this programme in FY 2025.
In addition, we have continued our solar panel roll out
programme and now have 151 sites with solar panels
installed, creating renewable energy, with plans
to further expand this initiative into FY 2025.
Our Scope 3 emissions, which include all other indirect
emissions that occur in our value chain, reduced by
14% versus our 2019 baseline driven by reductions in
emissions associated with the products we buy and with
our supply chain logistics. Scope 3 emissions represent
92% of our baseline footprint and therefore are an
important focus of our transition plan. Food emissions
are the largest individual contributor to our footprint and
we have made good progress over the year. By engaging
with suppliers we have moved to product specific
emission factors across a number of high emission
categories with procurement managers regularly
discussing emission reduction plans with suppliers.
We have also established a working party focused
on building emission reduction plans into our food
development cycle. We will continue to progress
in this area with the aim of reducing the emissions
of our menus across all brands, which is a key focus
for achieving Net Zero.
Performance
During the year we have diverted 98% of operational
waste from landfill putting us on track to deliver our
target of zero operational waste to landfill by 2030.
In partnership with our waste management providers,
we have run a bin optimisation programme, ensuring
that all of our sites have appropriate recycling and
general waste bins in the most accessible areas of the
business, to encourage improved segregation of waste.
This, alongside team engagement on our environmental
ambitions, has helped us maintain our recycling rate
at 59%.
We have targeted a recycling rate of 80% by 2030 and
are working across a number of fronts to achieve an
improvement in the proportion of waste we recycle.
We are working with suppliers to reduce the volume of
packaging entering our sites, and to ensure that as much
packaging as possible can be recycled, as well as engaging
teams in the positive environmental impact they can
have by increasing recycling rates. We face challenges
in some geographies where recycling of materials
is not yet available, and we continue to investigate
opportunities to access recycling in these areas.
Performance
This year we have achieved a 23% reduction in food
waste against our FY 2019 baseline.
In our sites, food waste reduction has been achieved
through strengthened operational procedures which
reduce the level of waste generated during the food
prep process, including enhanced ordering accuracy, as
well as reduced menu complexity. The introduction of
auto-ordering has helped to improve the forecasting of
dish mix and therefore reduced waste through spoilage.
In addition, we have continued our roll out of Too Good
To Go which is now across seven brands, saving on
average over 14,000 meals a week from wastage and
having saved two million meals from waste since the
beginning of the partnership. During FY 2025 we will
collate data to better understand the drivers of guest
plate waste in order to develop strategies targeting a
reduction of waste returned to our kitchens on plates.
Unavoidable food waste from our pubs and restaurants
is sent to anaerobic digestion. The digestion process
itself creates biogas which is then captured and used
to generate electricity.
We have also remained focused on managing waste
within the supply chain, particularly around menu
changes and key dates, and have maintained the
progress made last year. Where possible we donate
food which would otherwise go to waste within the
supply chain to Fareshare who redistribute the food
to community groups who need it. During the period
we donated 16 tonnes of food through Fareshare,
the equivalent of c.38,000 meals.
Zero
Target to achieve Net Zero
greenhouse gas emissions
by 2040
Zero
Target to achieve zero
operational waste to landfill
by 2030
50%
Target to reduce
food waste by 50%
by 2030
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 39
Strategic Report
Task Force on Climate-related
Financial Disclosures (‘TCFD’)
We are pleased to confirm that we have
included climate-related financial disclosures
consistent with the TCFD recommendations
and recommended disclosures, except for
Scope 3 emissions, and in compliance with
UKLR 6.6.6R(8). Our report addresses the
four TCFD pillars: Governance, Strategy,
Risk Management and Metrics and Targets.
In preparing this information, all of the guidance
in Section C and E of the TCFD Annex has been
considered. Scope 3 emissions have not been
disclosed for the current period. Our intention
is to disclose Scope 3 emissions on the
conclusion of our rebasing for Forest, Land
and Agriculture targets as required by Science
Based Targets initiative, allowing us to begin
disclosure on a basis which we expect to
remain consistent in future years. We anticipate
our internal processes to be concluded in the
first half of 2025 with Science Based Targets
initiative approval to follow.
Governance
We, alongside our stakeholders, recognise
that the health of our planet is critical to the
wellbeing of society at large and that the
food industry has a significant part to play
in addressing the current climate emergency.
We also recognise that the food industry will
feel the effects of continued climate change
ever more acutely which will result in changes
in consumer behaviour, advances in innovation
and the evolution of leisure offers to adapt
to changing needs.
The Board of Mitchells & Butlers plc is
committed to delivering the purpose of the
organisation; to be the host of life’s memorable
moments, and to do so in a way which reduces
the environmental harm caused by operations.
The Board considers climate-related matters
when reviewing and guiding strategy,
investment decisions and the risk management
policies. Our approach to climate enables us to
evolve our offers to meet changing consumer
expectations in order to realise potential
climate-related opportunities whilst also
monitoring and addressing the risks posed by
climate. We have developed a clear governance
framework to support our assessment and
response to climate-related matters.
This framework has helped us to continue to
make progress against our climate goals and
to address challenges faced by the industry
as a whole.
Strategy & risk management
In response to the TCFD requirements, we
performed a detailed review of the climate-
related risks and opportunities relevant to
the business. The resulting principal risks were
added to the risk register and are now assessed
on a regular basis as part of the Risk
Committee’s review.
Identifying, assessing and managing
climate-related risks and opportunities
The following stages formed the process of
identifying and assessing climate-related risks
and opportunities:
• Workshops were held with external third
parties who reviewed Mitchells & Butlers
operations before generating a list of
climate-related risks and opportunities
relevant to the business. These were
considered alongside guidance from the
World Business Council for Sustainable
Development (WBCSD) Food, Agriculture
and Forest Products TCFD Preparer Forum
to formulate a list of all the climate-related
risks and opportunities which may impact
our organisation
• Workshops were held with representatives
from relevant functions across the
organisation to obtain a wide range of
perspectives on the identified climate-
related risks and opportunities. Using
expert knowledge of the business and its
supply chain, experience from past events
and insight into guest behaviour, each risk
and opportunity was assessed and opinions
were gathered on future change and
perceived risk materiality. The output of
the workshops was a reduced list of risks
and opportunities which were considered
to be most material to the organisation
based on this qualitative assessment.
This process helped to reinforce our
response to TCFD requirements
• Our established risk management
framework and heat mapping (see page 46)
was then used to establish which of those
identified risks were likely to be material
to our business, being those with a high
likelihood and a high impact. Two risks were
identified to be material, and therefore have
now been included as principal risks, with
the results discussed and approved by the
Risk Committee. Our sustainability strategy
has been developed to mitigate those risks
where possible with associated KPIs to track
progress, as well as risk indicator measures
which identify if the impact of an identified
risk is increasing
All potential climate-related risks and
opportunities are reassessed annually through
the Sustainability Steering Committee and Risk
Committee. Analysis and response to risks are
supported by TCFD guidance and evolving
corporate best practice. Additional risks are
added to the principal risk register if the criteria
to do so are met; no additional risks have been
added to the register in the financial period.
Through our membership and active
involvement in industry-led organisations, such
as the UK Hospitality Sustainability Committee
and Zero Carbon Forum, and through regular
dialogue with suppliers, we will continue to
collaborate on our responses to climate risks
and to seek out opportunities to progress
against our goals. We engage actively with
our suppliers on sustainability issues, including
at our annual supplier conference, and will
be seeking to further progress alignment of
objectives which will help manage climate
risks through Scope 3 emissions measurement
and management.
The purpose of this statement is to provide investors and wider stakeholders
with an understanding of Mitchells & Butlers plc’s governance structure in
relation to climate, our exposure to climate-related risks and opportunities,
our strategic response to managing identified risks and opportunities and the
key metrics we use.
40 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Climate-related risks and opportunities
management and strategy
Our analysis of climate-related risks and
opportunities identified the risk of the
introduction of carbon taxes and the risk of
increased severe weather events as material
and these risks have been included within our
principal risks (see pages 46 to 52). These risks
are consistent across all of our locations.
During the year we have conducted
quantitative analysis of identified risks.
In the modelling of climate-related risks
we have considered three warming scenarios,
using the Representative Concentration
Pathways (RCP) 2.6, 4.5 and 8.5 developed
by IPCC as a basis for our assumptions.
RCP capture forecast how concentrations of
greenhouse gases in the atmosphere will likely
change as a result of human activity, and
predict the future impact on regional climates.
RCPs are widely recognised and represent
respectively 1.6°C of warming, 2.4°C of
warming and 4.3°C of warming. Our analysis
assesses the short-term risks as being between
0–3 years, in line with how we assess our
principal risks and viability statement;
medium-term risks between 3–6 years; and
long-term risks between 6–20 years in line
with our longer-term contracts and climate
commitments.
The results of the quantitative analysis will be
considered in our financial planning as we make
progress against our transition plan. Elements
of the sustainability strategy are already
embedded in financial planning, for example
capital investment in sustainable technology
and building development are considered at
Group level and built into the annual capital
plan and specific initiatives developed by
brands to ensure optimal alignment with guest
needs are factored in to brand budgeting
assumptions. The financial, and environmental,
impact of all sustainability initiatives are
carefully tracked and reported to the
Sustainability Steering Committee which
in turn escalates any material impact to the
Executive Committee and Board.
Board oversight of climate-related risks and opportunities
The Board is responsible for the
long-term success of Mitchells &
Butlers plc and has an established
framework in place which enables
effective assessment and
management of risks, including
climate-related risks and
opportunities.
Responsibility for ESG matters is
managed within the framework by the
Corporate Responsibility Committee,
a Board level committee, using insight
from the Group Risk Committee on
the assessment of climate-related
risks, the Group Audit Committee
on the financial consideration of
climate-related risks and the Group
Remuneration Committee on the
inclusion of climate-related metrics
in remuneration.
The Corporate Responsibility
Committee is chaired by Bob Ivell and
is led by Dave Coplin, Non-Executive
Director, who has been designated
by the Board to take a lead role in
oversight and development of the
Company’s approach to climate-
related issues. Dave Coplin has,
for the last 30 years, been providing
strategic advice and guidance on
driving innovation and transformation
to organisations and governments
both here in the UK and around the
world giving him excellent experience
in this role. The Committee is made
up of five Board members; Phil Urban
is invited to attend regularly.
Board of Directors
The Corporate Responsibility
Committee meets at least twice a year
to review progress utilising information
provided by the Sustainability Steering
Committee. The Sustainability Steering
Committee, which is a management
level committee, provides regular
update papers to the Corporate
Responsibility Committee, including
performance against stated targets
including Net Zero by 2040, waste
management and food waste
reduction, as well as progress
on key transition plan initiatives.
The Board is updated at least annually
on performance against targets
and initiatives or investment, either
underway or future, which facilitate
the attainment of our goals. Ad hoc
updates are provided where approval is
required, or a significant development
is reported. As such climate-related
risks and opportunities form an
important part of the context from
which the organisational strategy is
considered and developed, ensuring
that the Group is positioned to protect
itself from financial and reputational
risks associated with climate.
This structure also enables
the Company to benefit from
the commercial opportunities
of accelerating the sustainability
programme in order to align brand
propositions with guests’ changing
needs. When considering any
business planning activity, the Board
takes into consideration the broader
context of its trading environment,
with details of the climate aspect
provided by the Corporate
Responsibility Committee.
Corporate Responsibility
Committee
The Sustainability Steering
Committee is a management level
Committee which has responsibility
for the continuous monitoring and
evolution of the sustainability strategy.
The Committee oversees the three
working groups responsible for
discrete areas of the sustainability
strategy: respect for the planet, pride
in our offers and care for communities.
The Sustainability Steering
Committee meets with the working
group leads every eight weeks, and
receives supporting update papers in
advance of meetings. The meetings
ensure that the Sustainability Steering
Committee maintains oversight over
sustainability activities which are
in place across various business
functions, ensuring that our approach
is consistent and executed effectively.
These meetings also provide the
foundation of the update information
provided to the Board-level Corporate
Responsibility Committee. The
Sustainability Steering Committee
also meets on a monthly basis with
members of the Executive Committee
to inform management on progress
of key initiatives and to discuss any
decisions required by the Executive
Committee.
Sustainability Steering
Committee
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 41
Strategic Report
Task Force on Climate-related Financial Disclosures continued
Our sustainability strategy is designed to
mitigate the financial and reputational impact of
climate-related risks and to capture the benefit
of aligning our brand proposition to changing
consumer needs. In particular, we have a
well-developed transition plan to Net Zero,
which has been designed in collaboration
with third-party experts and was validated
by Science Based Targets initiative (SBTi).
We plan to resubmit for Forestry, Land and
Agriculture (FLAG) SBTi in 2025 and are
currently in the process of calculating our 2019
baseline. Our Net Zero roadmap aligns with
SBTi methodology to keep global warming well
below 2°C. This detailed roadmap provides the
benchmark against which performance can be
tracked to a low emission economy, with our
contribution clearly understood as well as that of
our suppliers, such that we can influence others
in our supply chain to reduce their emissions.
Sustainability is a key priority for the Board
and management and remains so despite the
challenges currently faced by the industry as a
whole. Hence, we have included a Sustainability
target in our Long Term Incentive Plan for the
Executive and Leadership team and intend to
include appropriate measures within incentives
plans through the organisation to outlet level.
The financial impact of identified climate-
related risks and opportunities bring to life the
possible consequences for the business and its
supply chain. The various warming scenarios
were developed using the Met Office
predictions of future weather events. Physical
risk, we performed a qualitative analysis of the
possible (1) reduction in sales, (2) increase in
supplier costs, and (3) increase in damage to
properties under the three warming scenarios.
We believe that we have a robust strategy in
place to help mitigate an element of the risks
posed particularly under RCP 2.6 where the
impact is on the organisation and supply chain
is lower. Under more severe warming
scenarios, such as RCP 8.5 the impact on the
environment will be more severe reducing our
ability to mitigate and manage risks, with food
supply chain disruption being a particular area
of risk. We have a centralised building
management team who monitor the physical
risk to our estate and our sustainability strategy
is designed to address the transition risks
identified.
We are conscious that collaboration,
particularly with the supply chain, will be vital
in order to tackle the future challenges ahead.
Identifying ways to develop commercially
viable solutions to approach the environmental
impact of the food supply chain, an area of
greater risk, is a significant challenge and one
on which we are working with industry bodies,
supply chain partners and other hospitality
businesses. Under a 4°C warming scenario
whereby, according to Met Office predications,
adverse weather events would be far more
frequent, the impact of both our physical and
transition risks are higher. From a physical risk
perspective, due to sea levels rises in this
scenario, a small number of sites would enter
the flood risk register and we would expect
increased frequency of damage to properties
caused by storms and extreme weather.
We monitor the frequency of weather-related
damage to buildings centrally and would
evolve an enhanced strategy to mitigate the
risk under this scenario should this be the likely
direction of travel.
Below is a summary of the climate-related
risks included within our principal risk register;
for further details on our risk assessment
framework please see page 46.
Risk level
Short-term Medium -term Long-term
Transition risk
Risk
Introduction of carbon taxes and levies
Category
Operational costs
Description
This risk represents the impact on
operating costs of the business both
directly through taxation and indirectly
through higher input costs which would
result from the introduction of taxation
and levies attributed to greenhouse
gas emissions.
Qualitative assessment has identified
this risk as both high in impact and
likelihood over the medium to long term
especially under RCP4.5 and RCP8.5
warming scenarios. The introduction
of a form of carbon taxation is likely
to be introduced as pressure mounts
for progress to be made against the
Government ambition to achieve
Net Zero by 2050.
Mitigating actions
We have developed a Net Zero strategy with a target
date of 2040 which has been validated by Science
Based Targets initiative (SBTi). We plan to resubmit
for Forestry, Land and Agriculture (FLAG) SBTi in
2025 and are currently in the process of calculating
our 2019 baseline.
We have a number of initiatives underway designed
to reduce our emissions in line with our Net Zero
roadmap. In order to reduce Scope 1 & 2 emissions,
we are investing in solar panels, electric kitchens and
fully electrifying sites. Furthermore, we are investing
in a number of initiatives that will reduce our energy
consumption.
The detailed plan for reduction will help to mitigate
an element of potential cost, and a target date ahead
of Government ambition will help to position the
organisation ahead of the market average.
In order to reduce Scope 3 emissions, we are working
closely with suppliers, particularly in high emission
categories, to support their pathway to carbon
reduction which will help to mitigate an element of
this risk. However, if input costs increased materially
in response to carbon taxes margins would be at risk.
We are a member of UK Hospitality Sustainability
Committee which enables us to have foresight over
potential policy changes impacting the organisation.
Quantitative analysis considerations
The approach to the quantitative assessment
performed took the Group’s forecast carbon
emissions, from our net zero plan submitted for
Science Based Targets initiative approval, and
applied the 2024 carbon price for use in civil
penalties in the UK of £64.90 per tonne of CO
2
over the short, medium and long term giving an
estimate of the potential financial impact of the
introduction of carbon taxes.
Under RCP2.6, a scenario under which
warming remains under 1.6°C, we have
considered the introduction of carbon taxes
is unlikely as other action has controlled
temperature rise.
Under RCP4.5 we assume a high likelihood of
introduction of taxes in relation to Scope 1 & 2
emissions in the long term as warming poses
a greater risk and intervention is introduced
to attempt to limit warming.
Under RCP8.5, where warming is 4.3°C, the
impact would be considerable with increased
severe weather events and considerable
impact on human welfare. We have considered
intervention in both the medium and long term
likely, and due to the scale of impact have
assumed carbon tax of Scope 1, 2 & 3 emissions.
42 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Physical risk
Risk
Increased severity of extreme
weather events
Category
Acute
Description
This acute physical risk represents
the risk to both revenue and the supply
chain of increased severe events.
Revenue would be impacted through
the interruption to trade caused by both
extremely hot weather and adverse
weather such as rain and snow, as well
as possible site closure resulting from
flooding. In addition, the availability
of products in the supply chain, in
particular agricultural produce, could
be impacted by severe weather affecting
product availability and input prices.
The qualitative assessment of potential
revenue impact included a high-level
review of previous interruption to trade
resulting from extreme weather and
considered scientific forecasts as to
the likely increase in extreme weather
events. Procurement information
relating to previous disruption to supply
chain due to localised weather events
and geo-political issues was reviewed
and considered in the context of
increased severe weather events.
As a result of these assessments the risk
has been identified as both high impact
and high likelihood.
Mitigating actions
The weather has a high level of impact on trading
levels across the estate and therefore monitoring
weather forecasts in relation to expected trading
levels is a normal part of the financial planning
of the business.
This monitoring activity will enable us to identify
when patterns of increased instances of extreme
weather events begin to develop at which point
investment in mitigating action, such as installation
of air conditioning, can be considered. In addition,
our experience during Covid has meant that we have
developed strategies to close sites at short notice,
such that in the instance of extreme weather
significantly impacting trade we could close sites
in order to mitigate some of the financial losses which
we would be exposed to.
In relation to site closure due to damage to buildings,
such as during flooding, we have insurance in place
to recover the lost trade and required repairs and this
therefore does not represent a significant risk in the
short term, however it might impact us in the medium
and long term under RCP4.5 and RCP8.5 if the
business incurs higher insurance premiums and
is unable to insure some buildings at high risk
of flooding.
To manage the risk associated with our supply chain,
we monitor and communicate with our suppliers
closely giving us foresight over potential supply
issues. We also have sufficient breadth of products
across our brands that supply issues with one product
could be mitigated through switching to a substitute.
We are also aware of emerging agricultural
techniques which are less susceptible to weather
conditions, such as vertical farming and regenerative
agriculture, as well as shifting crops to more
favourable conditions, and would consider these
alternatives if the supply chain were likely to become
severely impacted.
Quantitative analysis considerations
The quantitative assessment performed during
FY 2024 involved a detailed analysis of extreme
weather’s previous impact on trade to
determine the potential impact on revenue.
In order to quantify the future impact of
extreme weather, four weather-related data
points (maximum temperature, minimum
temperature, rainfall and wind speed) were
taken from the Met Office Climate Projections
under RCP2.6 and RCP8.5 warming scenarios.
These were used to determine the financial
impact of weather-related extreme events in
the short, medium and long term under the
three warming scenarios, that is above and
beyond what the Company has experienced
in the last three financial periods.
To measure the potential impact on the supply
chain, we reviewed historical impacts of
a variety of weather events and gathered
scientific evidence showing up to 31% decrease
in crop profits under RCP8.5, half of which can
be avoided by reallocating crop lands, and no
material impact on livestock products. Hence,
we have assumed 5% increase in crop items
cost under RCP4.5 and 10% under RCP8.5 as
Mitchells & Butlers will be able to implement
strategic ingredient swaps to dishes to adjust
for certain products’ inflation, both were
considered in the long term only.
To measure the potential impact of increased
flood risk on the estate, we assumed that in
the short term the risk would be mitigated by
insurance. In the medium and long term our
insurance premiums would increase under
RCP4.5 and RCP8.5 due to expected 11%
increase in flood instances which was derived
by the Met Office Climate Projections. In the
long-term scenario under RCP8.5, due to
significantly increased flooding we have
assumed that half of our high-risk sites would
be unlikely to be insured resulting in exposure
to financial risk.
Transition opportunity
Risk
Adjusting brand propositions to appeal
to changing consumer preferences
Category
Revenue
Description
Changing consumer preferences
towards products seen as better for the
environment, for example dietary shifts
towards low carbon products, presents
an opportunity for the Group to position
brands to appeal in an evolving market.
The breadth of brands within the Group
portfolio provides the opportunity to
test adapted brand propositions in a low
risk way and to therefore be ahead of
the market when consumer preferences
begin to change in the mass market.
Mitigating actions
All of the initiatives under the sustainability strategy
help to strengthen the Group’s position in relation
to environmental matters. This allows our brands to
communicate with guests on environmental issues
with consistency across the portfolio and to build
a reputation for sustainable operations.
Our focus on achieving ambitious environmental
targets will position the Group well to benefit from
changing consumer habits. Our ability to trial
proposition adaptations in appropriate brands to
gauge guest reaction will ensure we are well prepared
to make informed decisions in the future as consumer
preferences change. In addition, our scale and
commitment to our investment programme will
enable the Group to enhance the sustainability
credentials of its properties.
Quantitative analysis considerations
Consumer insight is continuously reviewed and
is used to inform brand evolution. In addition,
direct consumer feedback is used to highlight
changing guest preferences, and reactions
to brand changes designed to enhance
environmental credentials.
Alongside financial performance these metrics
will inform the future evolution of our brands.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 43
Strategic Report
Summary of quantitative assessment
Potential financial impact on profit in the average year (£m)
Risk level
Low Medium High
Introduction of carbon taxes and levies
Key Assumptions Time Horizon RCP2.6 RCP4.5 RCP8.5
• We calculated the financial risk of carbon taxes and levies
based on Mitchells & Butlers’ Scope 1, 2 & 3 emissions, as
per our SBTi submission, in the short, medium and long term
• We used the 2024 carbon price for use in civil penalties in
the UK – £64.90 per tonne of CO
2
e
<3 years
3–6 years
6–20 years
Increased severity of extreme weather events
Key Assumptions Time Horizon RCP2.6 RCP4.5 RCP8.5
1.Sales risk
• Maximum temperature, minimum temperature, rainfall
and wind speed were taken from the Met Office Climate
Projections under RCP2.6 and RCP8.5 warming scenarios
• The above weather events were quantified to determine
the financial impact of weather-related extreme events in
the short, medium and long term under the three warming
scenarios, above and beyond what Mitchells & Butlers
has experienced in the last three financial periods
<3 years
3–6 years
6–20 years
2.Supplier costs risk
• Assumed 5% increase in crop items cost under RCP4.5
and 10% under RCP8.5, both were considered in the
long term only
• Assumed no increase in livestock cost under RCP4.5
and RCP8.5
<3 years
3–6 years
6–20 years
3.Flood risk
• Assumed that Mitchells & Butlers’ insurance premiums
will increase in the medium and long term under RCP4.5
and RCP8.5
• Assumed that half of our high-risk sites are unlikely
to be insured in the long term under RCP8.5
<3 years
3–6 years
6–20 years
Task Force on Climate-related Financial Disclosures continued
44 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Climate-related metrics & targets
The below metrics are used either to track the performance of strategies designed to mitigate the impact of the principal climate-related risks, or as
an internal measure of risk exposure. Emission reduction has been included in the long term incentive scheme from FY 2024 with the SBTi verified net
zero reduction plan used as a basis to calculate targets. Performance against our stated sustainability KPIs is provided on pages 38 and 39.
Current and historical greenhouse gas emissions, Scope 1 & 2, are available within the Streamlined Energy and Carbon Reporting framework
and progress against our Net Zero roadmap is provided annually with details on the key initiatives within the sustainability section.
Metric category Metric Group targets Performance Link to identified
risks and
opportunities
Climate-related risk
Greenhouse gas
emissions Scope 1,
2 & 3
Unit of measure
tCO
2
e
Absolute Scope 1,2 & 3
emissions calculated
in accordance with
Greenhouse Gas Protocol
guidance by an
independent third party
which is checked and
verified internally.
Yes – Group target set, Net Zero by
2040 using 2019 as our baseline year.
We align our definition of Net Zero to
the SBTi corporate standard. Our Net
Zero target includes our Scope 1, 2 & 3
emissions, using an operational control
approach. Our near- and long-term
targets were verified by SBTi in January
2024. We have set a near-term target to
reduce our absolute Scope 1 & 2 GHG
emissions by 70% by 2030, compared to
a 2019 base year (aligned to well below
2°C) and a target to reduce our absolute
Scope 3 emissions 28% over the same
timeframe. We have also set a
long-term target to reduce absolute
GHG emissions from Scope 1, 2 & 3
by 90% by 2040 from a 2019 base year
to be Net Zero by 2040. Aligned to the
SBTi criteria we will offset our residual
10% emissions using carbon removal
offsets at our Net Zero date.
Scope 1 & 2 saw a
reduction of 18% versus
2019 base year.
Carbon taxes
and levies.
Climate-related risk
Waste management
Unit of measure
% of waste diverted
from landfill
Proportion of total waste
diverted from landfill, i.e.
recycled or incinerated.
Data is provided by a third
party and corroborated
with internal information.
Yes – Group target set – Zero
operational waste to landfill by 2030.
We underpin this target with an internal
metric on recycling, with an ambition to
achieve 80% of waste recycled by 2030.
98% of operational waste
is diverted from landfill.
We expect to achieve
zero operational waste
to landfill ahead of the
2030 target.
Carbon taxes
and levies.
Climate-related risk
Food waste
Unit of measure
Volume of food waste
generated
Volume of food wasted.
Data is provided by third
parties and corroborated
with internal information.
Yes – Group target set – Halve food
waste by 2030 from 2019 baseline.
We have achieved 23%
reduction of food waste
from 2019 baseline.
Carbon taxes
and levies.
Climate-related risk
Proportion of estate
exposed to flood risk
Unit of measure
% of estate
Proportion of sites within
the estate identified as
high or medium flood risk
due to proximity to rivers
and coasts.
No target set, used as an internal
measure of risk exposure.
Physical risk –
increased instances
of severe weather
events.
Climate-related
opportunity
Transition to
renewable energy
Unit of measure
% and Megawatt Hour
(‘MWh’)
% and MWh of energy
consumption which
is purchased from
renewable sources.
Data is provided by third
parties and reviewed
internally.
No target set, reported as an indicator
of progress.
151 estate sites have
been fitted with solar
panels to date. In FY 2025
we expect a further 175
to be installed.
Carbon taxes
and levies.
Climate-related
opportunity
Workforce
competence
Unit of measure
Number of employees
to complete training
Sustainability training
made available to all
employees.
Sustainability included
as part of the induction
process.
Target 80% of General Managers
to complete training and 90%
of inductions to have included
sustainability.
Around 18,000 people
have completed the
sustainability training
and sustainability is
planned to be integrated
into inductions during
FY 2025.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 45
Strategic Report
Risks and uncertainties
Keeping risk under control
This section highlights the principal risks and
uncertainties that affect the Group, 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 Group faces but
focuses on those that are currently considered
to be most relevant. Please also refer to how
we link the key risks to our strategic priorities,
on page 35.
Overview
Risk management is critical to the proper
discharge of our corporate responsibilities and
to the delivery of shareholder value. Risk is at
the heart of everything we do as an organisation.
Therefore, the process for identifying and
assessing risks and opportunities for
improvements is an integral and inseparable
part of the management skills and processes
which are at the core of our business.
There is a formally established Risk Committee
in place which continues to meet on a quarterly
basis to review both the key risks and emerging
risks facing the business.
Key risks identified are reviewed and assessed
by the Risk Committee in terms of their
likelihood and impact and recorded on the
Group’s ‘Key Risk Heat Map’, in conjunction
with associated agreed risk mitigation plans.
The processes that are used to identify
emerging risks and manage known risks are
described in the Internal Control and Risk
Management statement on pages 86 and 87.
Management support, involvement and
enforcement is fundamental to the success of
our risk management framework and members
of the Executive Committee take responsibility
for the management of the specific risks
associated with their function. Our Group risk
register clearly outlines the alignment of each
key risk to an Executive Committee member
and identifies an ‘action owner’, to ensure
responsibilities are formally aligned.
There is a robust and transparent process in
place to provide an appropriate level of
direction and support in the identification,
assessment and management of risks across all
areas of the business which have the potential
to seriously damage our financial position,
our shareholder value, our responsibilities to
our staff and guests, our reputation and our
relationships with key stakeholders. The Board
has carried out an assessment of the Group’s
emerging and principal risks, resulting in the
identification, assessment and management
of risks across all areas of the business. The
principal risks are subject to review each quarter
by the Audit Committee, which is also attended
by the Board.
Key risk heat map
The Key risk heat map below includes an
indication of the likelihood of a ‘risk event’
occurring in relation to each of the principal
risks and the expected magnitude of the
impact of each such event. The risk
assessments in the graph are after taking into
account the mitigating actions against each
of the risks.
Key risk heat map
Risk key
1
Borrowing covenants
2
Sales performance
3
People planning and development
4
Business continuity and crisis
management
5
Information and cyber security
6
Wage cost inflation
7
Failure to operate safely and legally
8
Cost of goods – price increases
9
Food supply chain safety
10
Health and lifestyle concerns
11
Environment and sustainability
12
Enforced Government closure/
trading restrictions
13
Introduction of carbon taxes
and levies
14
Increased severity of extreme
weather events
Our three lines of defence
First
• Executive Committee
• Leadership group/management
• Internal controls and processes
• Internal policies and procedures
• Training
Second
• Financial authority limits
• Risk management processes
• Audit Committee
• Risk Committee
• Health and Safety Team
• Technology specialists
• Legal support
Third
• Group Assurance
• Operational Practices Team
Impact
Likelihood
Low Catastrophic
Rare Almost Certain
4
12
7
155159
152
1
15101511
8
153
14
13
156
46 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Risk category and description High-level controls/mitigating activities Movement
1. Borrowing covenants
There are risks that borrowing covenants are breached
because of circumstances such as:
i. a change in the economic climate leading to reduced
cash net inflows; or
ii. a material change in the valuation of the property portfolio.
Risk Decreasing
In July 2023 an increased bank facility of £200m was
completed. This new facility contained a covenant package
that provides increased trading headroom in the unsecured
estate.
As documented in the Going Concern note, the Directors
have assessed a base case forecast and a severe but
plausible downside scenario with headroom against all
covenants and sufficient liquidity. Therefore the overall
risk is decreasing.
• The Group maintains sufficient headroom against
the covenants. The finance team conducts daily cash
forecasting with periodic reviews at the Treasury
Committee (the role of which includes ensuring that
the Board Treasury Policy is adhered to, monitoring
its operation and agreeing appropriate strategies for
recommendation to the Board).
• Each period the Treasury Committee meets and formally
considers compliance with financial covenants and limits
(both current and projected) for the following:
– The securitisation (Free Cashflow and EBITDA to
Debt Service).
– Non securitised bank facilities.
– Liquidity Policy headroom.
– Compliance with all aspects of Board Treasury Policy.
• In addition, regular forecasting and testing of covenant
compliance is performed.
• A detailed assessment of the mitigating risks is included
in the Viability statement on page 53.
Risk Decreasing
2. 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 profit, reducing headroom
against securitisation tests.
Consumer and market insight: If the Group 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.
Risk Stable
Overall, this risk remains stable.
• Right operational and commercial team and structure
in place. Brand alignment ensures the right research
is done and is acted upon.
• Daily, weekly and periodic sales reporting, monitoring
and scrutiny activity is in place.
• Our Eat Drink Share panel provides robust, quick and
cost-effective research. This is our own panel of 27,000
of the Group’s guests, whom we can use for research
purposes for quick and cost-effective insights.
• Primary research in partnership with brand and
category teams.
• Working with suppliers to tap into their research.
• Each brand has its own pricing strategy.
• Price promotions are in line with the agreed strategy.
• Sales training for management.
• Consumer and insight-led innovation process and
development for new brands.
• Reduce guest complaints by improving the local
management of social media responses (e.g. TripAdvisor
responses).
• Increased digital marketing activity including new loyalty
apps.
• Increased activity from takeaway and delivery offerings.
• Online guest satisfaction survey to collect guest feedback.
This feedback, together with the results of research
studies, is monitored and evaluated by a dedicated guest
insight team to ensure that the relevance to guests of the
brands is maintained.
• Our priority is to continue to protect our team members
and guests, providing an eating-out experience which
can be enjoyed. We have very strong health and safety
practices already in place in our businesses, which we
will enhance and evolve to tackle the challenges we face.
We will be transparent with guests as to these measures
such that they can trust in us and will clearly communicate
our expectations of guests to comply with the measures
put in place.
Risk Stable
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 47
Strategic Report
Risk category and description High-level controls/mitigating activities Movement
3. People planning and development
The Group 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 guest
service levels would be affected.
The external recruitment activity over the year has been
challenging due to the lack of quality candidates being
available. A further potential risk is the image of hospitality,
given the recent pandemic impact.
Retention is high amongst our Director and ‘head of
department’ populations which may lead to a perceived lack
of progression routes and hence unwanted loss of good
talent at lower levels.
Regarding retail labour, overall, there is a continued risk of
a lack of quality of internal and external pipeline for key roles
resulting in open vacancies or poor-quality appointments,
leading to poor performance, reduced quality of service
and loss of sales. There is a previous lack of consistent skills
training affecting guest satisfaction and employee
engagement and retention.
Kitchen Manager attraction and attrition continues to be the
highest concern, particularly given the decline in non-UK
applicants, decrease in internal progression and increase
in turnover which is influencing the overall risk rating.
Wage pressure (over 25s) remains an issue, as competition
for labour continues to increase.
Risk Stable
We have strong internal talent pools for a number
of operational roles; however, it is sometimes difficult to
recruit top Operations Director talent externally due to the
competitive marketplace. Therefore, the risk remains stable.
• The Group makes significant investment in training
to ensure that its people have the right skills to perform
their jobs successfully.
• Furthermore, an employee survey is conducted annually
to establish employee satisfaction and engagement,
and this is compared with other companies, as well
as previous surveys. Where appropriate, changes in
working practices are made in response to the findings
of these surveys.
• Remuneration packages are benchmarked to ensure that
they remain competitive, and a talent review process is
used to provide structured succession planning. Please
also refer to the Report on Directors’ remuneration,
on pages 92 to 112.
• The apprenticeship programme will also assist in
mitigating against the increasing risk in relation to
non-UK workers. Please also refer to the Chief
Executive’s business review on pages 20 to 22.
• Talent development and potential calibrations are
carried out biannually to anticipate and address
any risks/issues.
Risk Stable
4. Business continuity and
crisis management
The Group 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.
Risk Stable
Overall, the risk is stable. Staff have the resources and ability
to work remotely rather than rely on access to the Retail
Support Centre.
• The Group has in place crisis and continuity plans that
are reviewed and refreshed regularly.
• New ways of working are in place for all Retail Support
Centre staff, to ensure when the office is temporarily
closed to employees, there is little or no impact to staff,
given that all staff have the appropriate resources
available to them in order to work remotely and
in an efficient manner.
• We have assessed the risks associated with remote
working and cyber security and are confident that
those areas are suitably controlled.
Risk Stable
Risks and uncertainties continued
48 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Risk category and description High-level controls/mitigating activities Movement
5. Information and cyber security
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 Decreasing
Overall, the risk is decreasing due to the ongoing review
and improvement of cyber security controls. However,
the increased activity, information security and reliance
on IT systems continue to be a key focus to ensure
critical IT systems are kept secure and tested frequently
and any vulnerabilities identified are addressed efficiently.
• A review of cyber security processes is performed on a
regular basis in order to highlight any gaps and address
any challenges. As a result, a number of further
improvements have been made (and continue to be
made) to strengthen overall security cyber controls.
• In addition, controls include:
– The work carried out by the Group’s cross-functional
Information Security Steering Group.
– Group Assurance IT reviews.
– Implementation and revision of appropriate cyber
security governance policies and procedures.
– Ongoing security awareness initiatives continue
to be undertaken.
– A regular cycle of penetration testing.
– Increased focus on protecting the business
against potential cyber attacks has resulted in the
implementation of additional controls to mitigate
against such risks.
– The effective implementation of a business-wide data
protection compliance programme, including training
of all relevant employees and contractors.
– Systems, processes and controls have been reviewed
and updated to ensure compliance with data
protection laws.
- Annual IT Security training is undertaken and
reported on through the MABLE Learning
Management system, with an emphasis on how to
identify and defeat any external phishing attacks.
- Annual review of cyber security technologies,
policies and procedures to ensure we stay abreast
of current developments in the IT Security threats
and trends
- We commission Bridewell’s SOC (Security
Operations Centre) to monitor user activity across
the IT estate and to monitor and alert any incidents
raised by the SIEM (Security Incident Event
Monitoring) toolset.
- We commission a third-party Security Operations
Centre (SOC) to monitor user activity across the
Group to monitor and alert any incidents to MAB.
Risk Decreasing
6. 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.
Risk Stable
The immediate and future impact of National Living
Wage and wage inflation (together with the impact of the
Government’s plans to increase National Insurance), is kept
under regular review with updates provided to the Executive
Committee and Remuneration Committee, as appropriate.
The assumptions on the cost headwind form part of the
business costs forecasting and assumptions with any
cost headwind risks being addressed specifically.
• A detailed review of the risks associated with the
National Living Wage has been completed. This review
has been undertaken at a strategic level to ensure that
the Group carefully manages productivity and efficiency
across the estate.
• The ongoing review of the impact, post-implementation
of the National Living Wage and forthcoming increase
to National Insurance, will continue to be monitored
and reported to the Executive Committee and where
necessary the Plc Board/Remuneration Committee.
• The Group continues to work with UK Hospitality
and other agencies to engage with the Government
and the Low Pay Commission on future pay policy
and prospects.
• We have successfully implemented a time and attendance
system to improve the management controls and
reporting of staff hours.
Risk Stable
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 49
Strategic Report
Risk category and description High-level controls/mitigating activities Movement
7. 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 Group’s
or a brand’s reputation.
Risk Stable
Overall, the risk continues to be stable. In particular,
allergen-related incidents and near misses have stabilised.
• The Group maintains a robust programme of health and
safety checks both within its restaurants, pubs and bars
and throughout the supply chain.
• The dedicated Safety Assurance team uses a number
of technical partners including food technologists,
microbiologists and allergen specialists to ensure
that our food procedures are safe.
• Regular independent audits of trading sites are
performed to ensure that procedures are followed and
that appropriate standards are maintained.
• If a business is identified as underperforming in terms
of health and safety standards, it is immediately targeted
for improvement and then reassessed.
• Food suppliers are required to meet the British Retail
Consortium Global Standard for Food Safety and are
subject to regular safety and quality audits.
• Comprehensive health and safety training programmes
are in place.
Risk Stable
8. 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.
Utility costs: Utility costs continue to remain stable,
with only a minimal fluctuation in costs in the second half
of FY 2024.
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.
Risk Decreasing
The overall risk of inflation is easing given a number
of factors, including:
• Easing UK inflation
• Easing utility costs
• Improved availability of labour and raw materials
Mitigation to inflation is sought where possible through
a change of supplier, products, specification, range and
an ongoing review and monitoring of energy cost
management.
In order to reduce the overall impact of costs increases,
the Group 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 Group 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:
Food:
• A food procurement strategy is in place.
• Full reviews are carried out on key categories to
ensure optimum value is achieved in each category.
• A full range review was completed in FY 2024 ensuring
the correct number of products and suppliers.
This is regularly reviewed.
• Regular reporting of current and projected inflation.
• Good relationships with key suppliers.
Drinks:
• Each drinks category has a clearly defined strategic
sourcing plan to ensure the Group’s scale is leveraged,
the supply base is rationalised, and consumer needs
are met.
• Good relationships with key suppliers.
• Supplier collaboration programmes are in place.
Energy:
• Ongoing review of energy purchasing policy (covering
short-term and medium-term energy purchasing).
• The Group currently spot purchases its energy
requirements and also enters into short and medium-term
energy hedges as part of the overall energy purchasing
strategy.
• Energy Cost Price & Forecast Reports are produced
and monitored.
• Installation of solar panels at sites to reduce reliance
on the grid.
• Energy Ambassadors complete energy audits in every
business.
Risk Decreasing
Risks and uncertainties continued
50 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Risk category and description High-level controls/mitigating activities Movement
9. 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 and/or
employees.
Risk Stable
Risks facing the food supply chain safety are regarded
as stable.
• The Group has a Safety Assurance team and uses
a number of technical partners including food
technologists, food safety experts, microbiologists,
allergy consultants, trading standards specialists and
nutritionists.
• The Group uses a robust system of detailed product
specifications.
• All food products are risk rated using standard industry
definitions and assessment of the way the products are
used in the Group’s kitchens. Suppliers are then risk
rated according to their products.
• Each food supplier is audited at least once per year in
respect of safety and additionally in response to any
serious food safety complaint or incident.
• A robust response has been taken to manage allergens
and the associated data within the menu cycle, coupled
with a continuous review in place to ensure the controls
remain appropriate.
Risk Stable
10. 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. 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.
• We monitor changing behaviour in relation to health
and lifestyle issues and adapt our brands to appeal to
changing needs ensuring that the brands remain relevant
and competitive.
• We have set targets for ongoing sugar and salt reduction.
• A plan is in place to provide nutritional information for all
brands to allow customers to make informed decisions.
Please also refer to Pride in our offers, on page 38.
Risk Increasing
11. 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.
• We have set challenging targets in key areas such as
greenhouse gas emissions, food waste, recycling and
use of plastics (see pages 38 and 39).
• We have completed an exercise to determine our
baseline greenhouse gas emissions from which we have
developed a plan to deliver our ambition of Net Zero
emissions by 2040. Please also refer to our sustainability
targets on pages 38 and 39.
• We are working with the World Resources Institute
on their Cool Food Pledge programme to reduce
the emissions of food supply chain links, which is
a significant contributor to emissions globally.
• All direct palm oil purchases continue to be sourced from
Rainforest Alliance approved suppliers. Please also refer
to our Value creation story on pages 30 to 33.
• We are working with industry collaboration groups to
develop a roadmap to sourcing sustainable soy in our
supply chain.
• We are developing initiatives to reduce our consumption
of natural resources, with an electricity workstream live
in the business, and gas and water in the planning phases.
Risk Increasing
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 51
Strategic Report
Risk category and description High-level controls/mitigating activities Movement
12. Enforced Government closure/
trading restrictions
There is a risk that the business could be impacted by an
enforced Government closure or imposed severe trading
restrictions, of part or the whole of the estate, for example:
regional and/or national and/or global pandemic, chemical
and/or terrorist activity.
A global pandemic may have a negative impact on the
Group’s operating and financial performance and liquidity.
An outbreak of a global virus may cause severe disruptions
in the global economy which could adversely affect the
Group’s business or operations, as well as the business or
operations of third parties with whom the Group conducts
business.
Risk Decreasing
The frequency and nature of these risks arising are
unpredictable. However, given that Government trading
restrictions have been lifted, the associated risks to the
business have stabilised.
• Contingency plans are in place to review and respond to
enforced Government actions and/or severe business
disruption or trading restrictions. These should be
subject to a formal review.
• Business opening and closure processes have been
updated.
• Strong supply chain relationships are maintained to assist
in the event of cancelling and/or returning stock orders.
• Robust processes are in place to manage Government
furlough schemes.
• The Group, and in particular the Safety and Security
Team, is able to adapt quickly and respond to a change
in operational and functional processes, as a result of
a pandemic and/or business closures.
• Established communication cascade and mechanisms
are in place for employees, guests and suppliers.
• IT infrastructure, hardware, systems and employee
support is in place to maintain remote working.
• Key financial controls have been reviewed, assessed
and updated to ensure they continue to be operated
in the event of limited and/or no access to either the
Retail Support Centre or businesses.
• A high-level review has been undertaken to inform the
required changes to business planning and operating
procedures.
Risk Decreasing
13. Introduction of carbon taxes
and levies
This risk represents the impact on operating costs of the
business both directly through taxation and indirectly
through higher input costs which would result from the
introduction of taxation and levies attributed to greenhouse
gas emissions.
Risk Stable
Qualitative assessment has identified this risk as both high in
impact and likelihood over the short to medium term. Whilst
the risk is currently assessed as stable, the introduction of a
form of carbon taxation is likely to be introduced as pressure
mounts for progress to be made against the Government
ambition to achieve Net Zero by 2050.
• The Group is a member of the UK Hospitality
Sustainability Committee which enables us to have
foresight over potential policy changes impacting
the organisation.
• The Group has developed a Net Zero strategy with
a target date of 2040. The strategy has been developed
in partnership with an independent third party. Please
also refer to our sustainability targets, outlined on pages
38 and 39.
• We have a number of initiatives underway designed to
reduce our emissions in line with our Net Zero roadmap.
The detailed plan for reduction will help to mitigate an
element of potential cost, and a target date ahead of
Government ambition will help to position the
organisation ahead of the market average. Please also
refer to our Task Force on Climate-related Financial
Disclosures, on pages 40 to 45.
Risk Stable
14. Increased severity of extreme
weather events
This acute physical risk represents the risk to both revenue
and the supply chain of increased severe events. Revenue
would be impacted through the interruption to trade caused
by both extremely hot weather and adverse weather such
as rain and snow, and possible site closure as a result of
flooding. In addition, the availability of products in the
supply chain, in particular agricultural produce, could be
impacted by severe weather having an effect on product
availability and input prices.
Risk Stable
Following a qualitative assessment, which included a
high-level review of previous interruption to trade resulting
from extreme weather (as well as scientific forecasts as to
the likely increase in extreme weather events), the overall
risk is assessed as stable.
• The weather has a high level of impact on trading levels
across the Group and therefore monitoring weather
forecasts in relation to expected trading levels is a normal
part of the financial planning of the Group.
• This monitoring activity will enable the Group to identify
when patterns of increased instances of extreme
weather events begin to develop.
• In relation to site closure due to damage to buildings, such
as during flooding, we have insurance in place to recover
the lost trade and required repairs. Our experience
during closure has meant that we have developed
strategies to close sites at short notice, such that in the
instance of extreme weather significantly impacting trade
we could close sites in order to mitigate some of the
financial losses which we would be exposed to.
• To manage the risk associated with our supply chain,
we monitor and communicate with our suppliers closely
giving us foresight over potential supply issues. We also
have sufficient breadth of products and dishes across our
brands such that supply issues with one product could
be mitigated through switching to a substitute. Please
also refer to our Task Force on Climate-related Financial
Disclosures, on pages 40 to 45.
Risk Stable
Risks and uncertainties continued
52 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Compliance statements
Corporate viability disclosure
In accordance with Provision 31 of the 2018 UK
Corporate Governance Code, the Directors
have undertaken an assessment, including
sensitivity analysis, of the prospects of the Group
for a period of three years to September 2027.
Assessment period
Three years continues to be adopted as an
appropriate period of assessment as it aligns
with the Group’s planning horizon in a fast
moving market subject to changing consumer
tastes in addition to economic and political
uncertainties, and is supported by three year
forecasts as approved by the Board. Beyond
this period, performance is impacted by
domestic and global political, macroeconomic
and other considerations which become
increasingly difficult to predict.
Assessment of prospects
The Group’s financial planning process
comprises a detailed forecast for the next
financial period, together with a projection
for the following two financial years.
The Group’s strategy seeks to provide a strong
capital base and long-term direction to protect
the viability of the business model given
prevailing and evolving market and economic
conditions. The Directors’ assessment of
longer-term prospects has been made taking
account of the current and expected future
financial position and the principal risks and
uncertainties, as detailed on pages 46 to 52
within the Annual Report.
The main trading risks facing the business
relate to uncertainty surrounding the political
and economic environment on both a domestic
and global basis manifest as variability
in consumer demand, cost headwinds and
potential supply chain disruption. Longer-term
further risk is identified around evolving
consumer demands and tastes.
Key factors also considered in the assessment
of the Group’s prospects are a strong market
position built on a diverse range of brands
and offers trading from a well-positioned and
largely freehold estate, supported by capital
investment focused on development and
premiumisation of offers and an appropriate
remodel cycle. These are all anticipated to
contribute to outperformance against the
wider market.
Assessment of viability
As set out in the note to the Accounts on Going
Concern, the principal funding arrangements
of the Group consist of just under £1.2bn
of long-term securitised debt which amortises
on a scheduled profile over the next 12 years.
Securitisation covenants are tested quarterly,
both on an annual and a half year basis. In
addition the Group has an unsecured committed
facility for £200m, with financial covenants
tested half yearly, and which expires within the
three year term of this assessment, in July 2026.
The unsecured facility is currently undrawn.
Following a number of years of very
challenging trading, with the pandemic being
followed by high cost inflation (notably wages
and energy), profits have increased markedly
this year as the Group has been able to trade
throughout without restrictions, cost inflation
has abated and sales have continued to grow.
The principal short-term risks facing the
business are now therefore assessed to be
around generating further growth on this level
of demand, in addition to mitigating further
cost inflation. The Group has reviewed a
number of forecast scenarios and sensitivities
around these risks, including additional stress
testing that has been carried out on the
Group’s ability to continue in operation under
unfavourable operating conditions. In making
this assessment the Group has taken the view
that there will be no material further adverse
impact of Covid-19 (or any other pandemic).
Through the assessment period, the Group
is forecasting sales growth consistent with
current levels. Further, in the first year of the
assessment period cost inflation is expected
to be approximately 5% of the Group’s cost
base, however this is expected to decline to
three to four per cent by the end of the period.
The Group’s three year plan takes account
of these risks, in addition to the prevailing
economic outlook and capital allocation
decisions, alongside limited mitigating activity
such as improved operational efficiencies
(notably stock and labour management and
energy saving initiatives) to manage costs.
In the base case scenario the Group remains
within solvency covenant limits and has access
to sufficient liquidity to meet its outgoings.
It is noted that there is a requirement to
refinance the unsecured facilities during the
assessment period, in July 2026. It is considered
that this can be accommodated within the debt
capacity of the business given future anticipated
profitability and the strength of the creditor
relationships exhibited in previous refinancing
exercises. The resilience of this base case plan
is then assessed through the application
of forecast analysis, focused in particular
on growth of demand and levels of input cost
inflation during the current financial period as
well as on a longer-term basis. Sensitivities of
the following risks described in the Annual
Report have also been applied individually
to the base plan.
• Declining Sales Performance (Risk event 2):
3% lower sales growth rate on average from
December 2024 to end of H1 FY 2026 and
1% lower thereafter;
• Cost of Goods Price Increases (Risk event
8): 2% increase in direct Cost of Goods
(Drink and Food) in FY 2025, and 1% in
FY 2026 and FY 2027;
• Increased Wage Cost Inflation (Risk event
6): 1% in FY 2026 and FY 2027;
• Increased utilities cost (Risk event 8):
additional £15m in FY 2025, £10m in
FY 2026 and £5m in FY 2027; and
• A scenario combining all of the above
sensitivities, with some limited mitigating
activities, which reduces operating profit
by £48m, £72m and £93m in FY 2025,
FY 2026 and FY 2027 respectively.
Liquidity and solvency based on financial
covenants (Risk event 1) on both secured debt
and unsecured facilities are assessed in all
scenarios. In all scenarios the Group continues
to remain profitable with sufficient liquidity
and no forecast covenant breaches.
Viability statement
The Directors have concluded, based upon
the extent of the financial planning assessment,
sensitivity analysis, potential mitigating actions
and current financial position that there is a
reasonable expectation that the Group will have
access to sufficient resources to continue in
operation and meet all its liabilities as they fall due
over the three year period to September 2027.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 53
Strategic Report
Non-financial and sustainability
information statement
The Group has complied with the requirements
of Section 414CB of the Companies Act 2006
by including certain non-financial information
within the report. This can be found as follows:
• Business model on pages 26 to 29.
• Information regarding the following matters
can be found on the following pages:
– Environmental matters on pages 38 to 45;
– Employees on page 31;
– Social matters on pages 30 to 33;
– Respect for human rights on pages 70,
84 and 85; and
– Anti-corruption and anti-bribery matters
on pages 84 and 85.
Where principal risks have been identified
in relation to any of the matters listed above,
these can be found on pages 46 to 52 including
a description of the business relationships,
products and services which are likely to cause
adverse impacts in those areas of risk, and
a description of how the principal risks are
managed.
• All key performance indicators of the
Group, including those non-financial
indicators, are on pages 36 and 37.
• The Financial review section on pages 56 to
58 includes, where appropriate, references
to, and additional explanations of, amounts
included in the accounts.
Section 172 Companies Act statement
The Directors have acted in a way that they
considered, in good faith, to be most likely to
promote the success of the Company for the
benefit of its members as a whole and in doing
so have given regard, amongst other matters,
to the following considerations in the decisions
taken during the financial period ended
28 September 2024:
• the likely consequences of any decision
in the long term;
• the interests of the Company’s employees;
• the need to foster the Company’s business
relationships with suppliers, guests and
others;
• the impact of the Company’s operations
on the community and environment;
• the desirability for high standards of
business conduct; and
• the need to act fairly as between members
of the Company.
The Board has a duty under Section 172
Companies Act 2006 to promote the success
of the Company and, in doing so, must take
account of the effect on other stakeholders of
how it manages the business of the Company,
whether these stakeholders are from within the
Company, in its Group or outside the Company
and its Group. Throughout the year the Board
has kept in mind these responsibilities as it has
supervised and monitored the business
activities and prospects of the Company and
as it has considered, and, where appropriate,
made decisions relating to strategic aspects
of the Company’s affairs.
In addition, the 2018 UK Corporate
Governance Code specifically requires that
the Board should understand the views of
the Company’s key stakeholders (including
employees, suppliers, customers and others)
and keep stakeholder engagement
mechanisms under review so they remain
effective. The 2018 Code also recommends
that there should be regular reporting as to how
the Board has complied with this engagement
approach in its decision-making processes and
how the interests of different shareholders
have been considered.
In carrying out these functions, the Board
had regard to those stakeholders which it had
identified as being of significant importance.
These are the Company’s shareholders, those
employees of the Mitchells & Butlers Group
who were likely to be affected by the activities
of the Company (including their job security
and entitlements in terms of pay, pensions and
other benefits), guests who purchase goods
and services provided by the Company,
suppliers to the Company, whether they are
external to the Mitchells & Butlers Group or
within that Group, governmental authorities
such as HMRC and regulatory bodies, the
Trustees of the Group’s pension schemes,
providers of finance to the Group including its
banks and bondholders, real estate property
counterparties (whether as landlords or
tenants) and those specific entities or
individuals who are likely to be affected by
the outcome of the relevant matter falling
for consideration on a case-by-case basis.
There is a robust and transparent process
in place to provide an appropriate level of
direction and support in the identification,
assessment and management of risks across all
areas of the business which have the potential
to seriously damage our financial position,
our shareholder value, our responsibilities
to our staff and guests, our reputation and
our relationships with key stakeholders.
Established communication cascade and
mechanisms are in place for employees,
suppliers and guests: engagement with
employees is discussed on page 69 of the
Directors’ report, which sets out the various
platforms for employee communications,
facilitated by Dave Coplin, a Non-Executive
Director who acts as the ‘employee voice’;
engagement with key, critical suppliers is
addressed on page 77 of the Corporate
Governance Statement which describes the
supplier tiering process; and engagement with
guests is discussed on page 104 of the Report
on Directors’ remuneration which describes
the mechanisms for providing guest feedback.
Compliance statements continued
54 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
The Company’s culture is embodied in a set of
PRIDE values of Passion, Respect, Innovation,
Drive and Engagement which underpin its key
priorities of People, Practices, Profits and
Guests. The Board observes these PRIDE
values in discharging its everyday
responsibilities in order to ensure that decisions
taken are in line with the Company’s values and
objectives. High standards of business conduct
are expected, in furtherance of which the
Board has implemented a Code of Ethics,
which is fully described on pages 84 and 85
of the Corporate Governance Statement, and
a declaration of compliance with the Modern
Slavery Act 2015 (including a Supplier Code
of Conduct) is dealt with on pages 70 and 71
of the Directors’ report. Appropriate scrutiny
of the environmental impact of the Group’s
activities is included in the Sustainability
section of the Strategic Report on pages 38
and 39.
Not all of those stakeholders’ interests fall
for consideration in each set of circumstances
which the Board has to consider. However,
as and when a particular matter falls for review
by the Board, it first seeks to identify those
stakeholders which are likely to be impacted by
the decision of the Board, and then the Board
discusses the respective interests of those
stakeholders as well as the consistency
(or otherwise) of the relevant proposal with
the Board’s existing, or any proposed change(s)
to its, strategic plan.
Major matters considered by the Board during
the period included consideration of the UK
hospitality market as a whole, including its
strengths, weaknesses, and potential
opportunities together with the wider
macroeconomic environment; the progress
of the sustainability strategy; and the Group’s
initiative in conjunction with the Social Bite
charity as part of its sustainability goals. In
considering these matters, the Board looked
not only at the position and prospects of the
Company, but also took into consideration the
wider Mitchells & Butlers Group as a whole.
Having identified the relevant stakeholders
and their interests in relation to specific matters
or particular circumstances, the Board then
assessed the relevant weighting of those
interests in considering and eventually
reaching its conclusions, whilst being mindful
of the need to comply with the Group’s
obligations of its securitisation arrangements
and other financial arrangements.
In reaching its decisions, the Board was mindful
of the need to seek to preserve the integrity of
the Company’s business so as to allocate its
resources in such a way as to ensure creditors’
interests and the interests of other stakeholders
such as employees and guests were not
prejudiced.
Board papers set out the rationale for the
proposals and the relevant decisions were made
after discussion amongst the Board members
with appropriate legal, accounting, HR and
treasury input. The processes implemented by
the Board included regular meetings to consider
key developments as well as the provision of
training, if requested by a Director, in relation
to their responsibilities as directors of a limited
company, including the responsibilities under
Section 172 Companies Act 2006.
Specific consideration was given in the
decision-making processes implemented by
the Board to how the manner in which the
Company operated, and the specific proposals
it was asked to consider, aligned to its strategic
goals as described on pages 34 and 35 and its
agreed purpose as referred to on page 07.
The Board also confirmed that, in discharging
its responsibilities for management,
supervision and control of the Company’s
business and its affairs, it would seek to align
to the Mitchells & Butlers Group PRIDE Values
of Passion, Respect, Innovation, Drive and
Engagement as set out on page 27 of this
Annual Report.
Throughout this Annual Report we provide
examples of how we take these considerations
into account. The Board values the importance
of effective stakeholder engagement and
believes that stakeholders’ views should be
considered in its decision-making. Details of
how we engage with various stakeholders can
be found on pages 30 to 33.
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 55
Strategic Report
Financial review
Our financial and operating performance
“On a statutory basis, profit/(loss) before tax for the
financial year was £199m (FY 2023 £(13)m), on sales
of £2,610m (FY 2023 £2,503m).”
Tim Jones
Chief Financial Officer
The Group Income Statement discloses adjusted profit and earnings per share information that excludes separately disclosed items, determined by
virtue of their size or nature, to allow a more effective comparison of the Group’s trading performance from one period to the next.
Last year, FY 2023, was a 53-week reporting period therefore 52-week results are additionally disclosed for year-on-year comparison purposes.
Statutory (FY 2023 53 week) Adjusted
a
(FY 2023 52 week)
FY 2024
£m
FY 2023
£m
FY 2024
£m
FY 2023
£m
Revenue 2,610 2,503 2,610 2,459
Operating profit 300 98 312 221
Profit before tax 199 (13) 211 112
Earnings per share 25.0p (0.7p) 26.4p 15.6p
Operating margin 11.5% 3.9% 12.0% 9.0%
At the end of the period, the total estate comprised 1,726 sites in the UK and Germany of which 1,654 are directly managed.
Revenue
Total revenue of £2,610m (FY 2023 £2,503m) reflects a strong period of trading driven by sustained like-for-like sales
a
growth.
Like-for-like sales
a
in the first half increased by 7.0%, comprising an increase in like-for-like food sales
a
of 7.7% and of like-for-like drink sales
a
of 6.0%
driven by strengthening spend per head. Over the second half like-for-like sales growth was impacted, as expected, by the easing inflationary
environment as well as an unseasonably wet and cool summer and riots in some city centres during August. Volumes of food and drink were
in decline of c.1.5% across the year.
Like-for-like sales
a
:
Weeks 1–15
Q1
Weeks 16–28
Q2
Weeks 29–42
Q3
Weeks 43–52
Q4
Weeks 1–52
YTD
Food 8.7% 6.6% 2.6% 2.6% 5.3%
Drink 6.6% 5.3% 4.0% 3.4% 4.9%
Total 7.7% 6.1% 3.4% 3.4% 5.3%
56 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
The current underlying rate of growth of
like-for-like sales
a
, as measured over the first
seven weeks of the new financial period,
is 4.0%. The subsequent week was adversely
impacted by comparison against Black Friday
promotional activity last year, a timing
difference that reverses a week later, resulting
in growth over the first eight weeks being 2.7%.
Total sales grew by 4.3% against last financial
year and by 6.1% on a 52-week basis.
Separately disclosed items
Separately disclosed items are identified due
to their nature or materiality to help the reader
form a view of overall and adjusted trading.
Within the context of the overall valuation of
the Group’s freehold and long leasehold land
and buildings (as set out in Section 3 of the
notes to the financial statements), a £14m
reduction in value is recognised relating
to valuation and impairment of properties,
comprising a £4m increase in value arising from
the revaluation of freehold and long leasehold
sites, a £17m impairment of right-of-use assets
and a £1m impairment of computer software.
The £4m tax credit relates to these impairments.
National Insurance contributions, both of which
take place from April 2025. We anticipate that
energy costs, of which just over one half have
been bought forward, will broadly stabilise
overall with no further deflation.
Interest
Net finance costs of £99m (FY 2023 £108m)
for the financial year were £9m lower than the
same period last year. The net pensions finance
charge was £2m (FY 2023 £3m). This is
anticipated to be a credit of £7m this year,
FY 2025, following recognition of the net
surplus funding position across the schemes.
Earnings per share
Basic earnings (losses) per share, after the
separately disclosed items described above,
were 25.0p (FY 2023 earnings (0.7)p), with
adjusted earnings per share
a
of 26.4p (FY 2023
15.6p on 52-week basis).
The basic weighted average number of shares
in the period was 595m and the total number
of shares issued at the balance sheet date
was 598m.
Cash flow
FY 2024
£m
FY 2023
£m
EBITDA before movements in the valuation of the property portfolio 444 362
Non-cash share-based payment and pension costs and other 10 6
Operating cash flow before movements in working capital and additional pension contributions 454 368
Working capital movement 15 (1)
Pension escrow return 35 –
Pension deficit contributions (1) (8)
Cash flow from operations 503 359
Capital expenditure (154) (157)
Acquisition of Pesto Restaurants Limited (2) –
Acquisition of 3Sixty Restaurants Limited – (17)
Cash acquired on acquisition of 3Sixty Restaurants Limited – 5
Net finance lease principal payments (40) (52)
Interest on lease liabilities (17) (16)
Net interest paid (82) (90)
Tax (18) (3)
Purchase of own shares (7) –
Other 2 1
Net cash flow before bond amortisation 185 30
Mandatory bond amortisation (123) (116)
Net cash flow 62 (86)
This was a very strong period of cash generation. EBITDA, before movements in the valuation of the property portfolio increased sharply as a result
of an improved trading performance to £444m, which converted to net cash inflow for the period before bond amortisation of £185m (FY 2023
£30m) helped by a number of non-recurring items in the form of the return of historic pensions contributions from escrow, use of tax losses and timing
on working capital flows.
After all outgoings, including mandatory bond amortisation of £123m (including net impact of currency swaps), cash inflow was £62m (FY 2023
outflow £86m).
Other separately disclosed items include a net
profit arising on property disposals of £2m.
Refer to note 2.2 for comparative information.
Operating profit and margins
a
Adjusted operating profit
a
was £312m (FY 2023
£221m), an increase of 41.2% on a 52-week
basis. Adjusted operating margin of 12.0% was
3.0ppts higher than last year driven by strong
like-for-like sales
a
growth, reduced cost
inflation and operating efficiencies. Statutory
operating profit was £300m (FY 2023 £98m)
with statutory operating profit margin of 11.5%
(FY 2023 3.9%).
The aggregate net cost headwind for the
financial year was slightly less than 3% of our
cost base of c.£2.0 billion, after some offset
from deflation in energy prices. Looking
forward, cost headwinds are now anticipated
to increase to c.£100m for FY 2025,
representing just over 5% on the cost base.
Against a generally benign backdrop of general
inflation (including food and drink inputs) by far
the most significant increase is now expected
in relation to labour costs due both to increases
in the statutory National Living Wage and in the
recently announced increase in Employer
Governance Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 57
Strategic Report
Financial review continued
Capital expenditure
Capital expenditure of £154m (FY 2023 £157m, including £3m intangible assets) comprises £152m from the purchase of property, plant and
equipment and £2m in relation to the purchase of intangible assets.
FY 2024 FY 2023
£m Number £m Number
Maintenance and infrastructure 58 67
Remodels – refurbishment 69 170 65 127
Remodels – expansionary 2 8 4 7
Conversions 10 11 11 11
Acquisitions – freehold 12 4 9 4
Acquisitions – leasehold 3 2 1 2
Total return generating capital expenditure 96 195 90 151
Total capital expenditure 154 157
a. The Directors use a number of alternative
performance measures (APMs) that are considered
critical to aid the understanding of the Group’s
performance. Key measures are explained on pages
186 to 189 of this report.
Maintenance and infrastructure spend
included investment of £9m towards our
sustainability ambitions, such as solar panels
and electrified kitchen equipment, as well
as £4m towards digital and technological
improvements. Maintenance and
infrastructure spend was slightly lower
than prior year due to reduced spend
on IT infrastructure and hardware.
During the period we have made good progress
on increasing the number of completed
investment projects, and we remain committed
to resumption of an average seven-year
refurbishment cycle across our estate, although
supply chain constraints, notably in securing
timely planning consent, continue to prove
a challenge.
Four freehold sites were acquired in the year
comprising new sites in York, Nunthorpe and
Fitzrovia and the acquisition of the freehold
of a site previously operated as leasehold in
Edinburgh. Both of the leasehold acquisitions
relate to new Alex sites in Germany.
Pensions
Both the main pensions schemes of the Group
are now substantially de-risked. The Main Plan
completed a full scheme buy-in last year, and
the Executive Plan most recently completed
a full scheme buy-out late this year. No further
employer contributions are therefore being
made to either scheme. In the year a return
of £35m of historic contributions was made to
the Group from amounts held in escrow with
respect to the Main Plan. A further return of
£12m, relating to the monies left in the Executive
Plan escrow account, has been received after
the balance sheet date.
One further scheme, remains. This is closed
and unfunded and has estimated liabilities
of £25m.
Over the course of the year agreement was
reached to use any surplus arising in the Main
Plan to pay for employer contributions in the
defined contribution section of that Plan.
As this is a change in the Trustee’s agreed
use of the surplus compared to prior years
the full value of the surplus of £164m is now
recognised in this year’s accounts as an
economic benefit to the company.
Net debt and facilities
On the back of a strong cash performance,
net debt
a
at the period end reduced to £1,436m,
comprised of £989m non-lease liabilities and
lease liabilities of £447m (FY 2023 £1,633m
comprised of £1,170m non-lease liabilities and
lease liabilities of £463m). This represents a
multiple of 3.2 times EBITDA over the last year
including lease liabilities (2.2 times excluding
these liabilities).
Further details of existing debt arrangements
and an analysis of net debt can be found
in Note 4 to the financial statements and at
https://www.mbplc.com/infocentre/
debtinformation/.
Going Concern
After considering forecasts, sensitivities and
mitigating actions available to management
and having regard to risks and uncertainties,
the Directors have a reasonable expectation
that the Group has adequate resources to
continue to operate within its borrowing
facilities and covenants for a period of at least
12 months from the date of signing the financial
statements. Accordingly, the financial
statements have been prepared on the going
concern basis. Full details are included
in Section 1 of the notes to the financial
statements.
Approval of the Strategic Report
Our strategic report on pages 18 to 58 has been
reviewed and approved by the Board.
Tim Jones
Chief Financial Officer
26 November 2024
58 Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Outlines how the Group monitors its
actions, policies, practices and decisions
as well as the effect of those actions
on its stakeholders.
Governance
In this section
60 Governance at a glance
62 Chair’s introduction to governance
64 Board of Directors
66 Directors’ report
74 Statement of Directors’ responsibilities in
respect of the Annual Report and Accounts
75 Corporate governance statement
88 Audit Committee report
92 Report on Directors’ remuneration
Other InformationFinancial StatementsStrategic Report
Introduction Governance
Mitchells & Butlers plc Annual Report and Accounts 2024 59
The Board believes that good corporate governance is
essential to enable us to deliver our purpose for all our
stakeholders. It remains a top priority for the Board.
The Company is committed to the principles of the 2018
Corporate Governance Code published by the Financial
Reporting Council, which sets out standards of good
practice for listed companies.
Governance at a glance
Governance highlights
Attendance levels at Board and Committee meetings
Directors who served during the year Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Bob Ivell 8 (8) n/a 4 (4) 0 (0)
Keith Browne 8 (8) n/a n/a n/a
Amanda Brown 8 (8) 4 (4) 4 (4) 0 (0)
Dave Coplin 8 (8) 4 (4) 4 (4) 0 (0)
Eddie Irwin 8 (8) n/a n/a 0 (0)
Tim Jones 8 (8) n/a n/a n/a
Josh Levy 8 (8) n/a 4 (4) n/a
Jane Moriarty 8 (8) 4 (4) 4 (4) 0 (0)
Phil Urban 8 (8) n/a n/a n/a
The numbers in brackets in the table above confirm how many meetings each Director was eligible to attend during
the year.
Highest ever retail engagement score
(beating FY 2023’s record high)
85.3
See page 93
Board and Committee
meeting attendance
100%
The Board holds regular scheduled meetings
during the year and on an ad-hoc basis as and
when required. During the year eight Board
meetings were held and the attendance is set
out below. Members of the executive team
attended Board meetings as and when
appropriate.
Gender pay gap (for the Group)
5.9%
Mean
1.7%
Median
See page 108
Executive Directors’ Company pension
contributions were fully aligned with
that of the wider workforce (4%) on
1 January 2024
See page 99
Growth
• Support and oversight of the growth of the
business via our Ignite programme, to drive
cost efficiencies and increase sales; and
• Systematically enhance the amenity of our
estate through our established capital
programme.
See pages 34 and 35
Strategy
Deliver our strategic plan delivering targeted
and profitable growth.
See page 20
Sustainability
• Continue to deliver emissions reduction
in line with our Net Zero roadmap;
• Increase proportion of waste diverted
from landfill;
• Decrease levels of food waste; and
• Expand charitable partnerships.
See page 22
People
• Roll out of a talent system which will further
support the development of our internal
talent pipeline;
• Evolution of our employee value
proposition; and
• Continued work on our DEI initiatives
including employee affinity groups on
ethnicity, neurodiversity and gender.
See page 22
Risk
Reduce the impact of key risks facing the
business.
See pages 46 to 52
Focus areas for FY 2025
60 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Chair
Bob Ivell
The Chair is accountable
to shareholders for leading the
Board and ensuring the Board
receives timely, accurate information
to take good decisions for the
benefit of all stakeholders.
Board and Committee structure
Senior
Independent
Director
Jane Moriarty
The Senior Independent Director
supports the Chair on all
governance issues and provides
a communication channel
between the Chair and the
Non-Executive Directors.
Non-Executive
Directors
The Non-Executive Directors
support and constructively
challenge the executive team.
Audit
Committee
Chair – Jane Moriarty
See pages 88 to 91
Remuneration
Committee
Chair – Amanda Brown
See pages 92 to 112
Nomination
Committee
Chair – Bob Ivell
See page 83
Market Disclosure
Committee
Chair – Bob Ivell
See page 83
The Board
The Board has delegated the day-to-day running of the Group to the Chief
Executive Officer. The Executive Directors make and implement operational
decisions to run the Mitchells & Butlers business on a day-to-day basis. To support
the Chief Executive Officer in discharging his responsibilities, he is supported by
the Executive Committee.
The Executive Committee is responsible for ensuring that each of the Group’s
businesses and functions are managed effectively and that the key performance
indicators of the Group, as approved by the Board, are achieved. The Executive
Committee, chaired by the CEO, ensures the execution of the Company’s strategy
and the day-to-day management of the business. Certain other responsibilities
have been delegated to specialist committees and further details are given on
pages 83 and 84.
Board tenure for Chair and Non-Executive Directors
The UK Corporate Governance Code states that the Chair should not remain in post
beyond nine years from the date of their first appointment to the Board and that
circumstances which are likely to impair, or could appear to impair, a Non-Executive
Director’s independence include service on the Board for more than nine years from
the date of their first appointment. Of the Non-Executive Directors and Chair, four
Directors currently have less than nine years’ Board service.
Committees
Executive Directors
Phil Urban
(CEO)
Tim Jones
(CFO)
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 61
Governance
Chair’s introduction
to governance
As at 28 September 2024,
the Company had more than
50,000 employees and one
of the key roles for the Board is
to provide leadership for them
and maintain the highest
possible standards of
corporate governance.
“Dear fellow shareholders, I have pleasure
in updating you on our progress in corporate
governance over the past year.”
Bob Ivell
Chair
The Company is required to report under
the 2018 UK Corporate Governance Code
(the ‘2018 Code’). The 2018 Code places
emphasis on relationships between companies,
shareholders and stakeholders. It also promotes
the importance of establishing a corporate
culture that is aligned with the Company’s
purpose and business strategy, promotes
integrity and values diversity and sets the
expectations for reporting the Board’s
involvement in these areas. Some of these
aspects of the 2018 Code are reflected in the
Strategic Report on pages 18 to 58, which
sets out the Group’s strategy, progress and
performance for the year. Meanwhile, the
Board-focused corporate governance aspects
of the 2018 Code are reflected in the Corporate
Governance Statement on pages 75 to 87,
which sets out the Company’s compliance
against published governance requirements
where there is a narrative explanation as to
how the Board has approached compliance
with, or in a few limited areas divergence from,
the Code’s best practice guidance.
Climate change reporting requirements
continue to occupy the Board and details are
included in that section of the Strategic Report
on pages 40 to 45. Phil Urban heads our climate
change policy initiatives, and while this area
remains a responsibility of the entire Board,
the Corporate Responsibility Committee
manages and monitors the detail of the
Group’s approach to this important topic.
The Board oversight of climate-related risks
and opportunities is set out on page 41 in our
climate-related disclosures.
Sales growth remained robust over FY 2024,
with consistent market outperformance. Cost
headwinds will remain a challenge for the year
ahead, particularly in relation to labour costs,
however we are well placed to continue to
manage these costs whilst keeping guest
experience at the centre of everything we do.
Guest scores remain strong and ahead of the
market, and we have delivered exceptional
people metrics during the year. Our focus
remains on delivering sales growth and
efficiency gains, through our established Ignite
and capital programmes, to deliver continued
profit growth in the year ahead.
62 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Our broad range of Board talent covers a variety
of professional skills, and our diverse group of
Non-Executive Directors continue to bring
much experience and challenge to the Board.
My focus will continue to be on maintaining a
strong team, with a broad range of professional
backgrounds, experience from both within our
sector and in other industries and businesses
and communication skills to drive further
improvements where possible. From a
governance standpoint, the basic governance
arrangements already in place are unchanged
since FY 2022, with the exception of additional
procedures and reporting arrangements put
in place in order to comply with climate change
and diversity reporting requirements. Certain
aspects of the 2018 Code could not be, and
were not, complied with in FY 2024. These
deviations from the 2018 Code are fully
explained on pages 79 and 80 in the Corporate
Governance Statement in line with the ‘Comply
or Explain’ regime which forms an intrinsic part
of that 2018 Code.
The 2018 Code states that there should be
a formal and rigorous annual evaluation of the
performance of the Board, its committees, the
chair and individual directors and that the chair
should consider having a regular externally
facilitated Board evaluation. In FTSE 350
companies this should happen at least every
three years and an externally facilitated review
of the Board’s effectiveness last took place in
2018. Subsequently, the Board decided that
the interests of shareholders would be better
served by the Board focusing on the business
and consequently no external evaluation has
taken place since. The Board will review this
approach as and when it feels it necessary to do
so in the context of the circumstances in which
the Group is operating. Although there was no
formal evaluation carried out during the year,
I remain satisfied that the skills, contributions
and experience of the Board are appropriate
for the challenges faced by the Group during
the year and for the future. You can read the
Board biographies on pages 64 and 65.
The new UK Listing Rules came into effect on
29 July 2024 and replaced the previous Listing
Rules, and so all Listing Rule references in this
Annual Report have been updated accordingly.
The remainder of this Corporate Governance
Statement contains the narrative reporting
required by the 2018 Code, the UK Listing
Rules and the Disclosure Guidance and
Transparency Rules. I hope that you find this
Corporate Governance Statement to be
informative and helpful in relation to this
important topic.
We are committed to maintaining an active
dialogue with all our shareholders, and we
continue to offer our institutional investors
access to key senior management and our
Investor Relations team. The Chair of each
of our Audit Committee and Remuneration
Committee and the Senior Independent
Director are available for dialogue with
shareholders on any significant matters in
relation to their areas of responsibility if this
is needed and you can read their reports on
pages 88 and 92 respectively.
The Annual General Meeting will be held in
January 2025 and all shareholders are welcome
to attend. For those shareholders who cannot
attend but would like to hear the proceedings,
we will also supply a telephone listen-only facility.
Full details are set out in the separate Notice of
AGM published with this Annual Report.
I look forward to the year ahead, confident
in the knowledge that the Company is led by a
highly competent, professional and motivated
team. I also look forward to the support of you,
our shareholders, as our senior management
team looks to rebuild the business and continues
to focus on driving future profit growth and
creating additional shareholder value.
Bob Ivell
Chair
Mitchells & Butlers plc
For the Company’s latest financial information
Go to www.mbplc.com/investors
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 63
Governance
Board of Directors
A strong leadership team
Phil Urban
Chief Executive
M
E
P
Phil joined Mitchells & Butlers in January 2015
as Chief Operating Officer and became Chief
Executive in September 2015. Phil was
previously Managing Director at Grosvenor
Casinos, a division of Rank Group and Chair
of the National Casino Forum. Prior to that,
he was Managing Director for Whitbread’s
Pub Restaurant Division, and for Scottish
& Newcastle Retail’s Restaurants and
Accommodation Division. Phil has an MBA
and is a qualified management accountant
(‘CIMA’).
Tim Jones
Chief Financial Officer
M
E
P
Tim was appointed Chief Financial Officer in
October 2010. Prior to joining the Company,
he held the position of Group Finance Director
for Interserve plc, a support services group.
Previously, he was Director of Financial
Operations at Novar plc and held senior
financial roles both in the UK and overseas in
the logistics company, Exel plc. Tim obtained
an MA in Economics at Cambridge University.
Bob Ivell
Non-Executive Chair
R
N
M
C
P
Appointed to the Board in May 2011, Bob has
over 40 years of extensive food and beverage
experience with a particular focus on food-led,
managed restaurants, pubs and hotels. He is
currently a board member of UK Hospitality
and was previously Senior Independent
Director of AGA Rangemaster Group plc and
Britvic plc, and a main board Director of S&N
plc as Chair and Managing Director of its
Scottish & Newcastle retail division. He has
also been Chair of Carpetright plc, Regent Inns,
Park Resorts and David Lloyd Leisure Limited,
and was Managing Director of Beefeater
Restaurants, one of Whitbread’s pub
restaurant brands, and a Director of The
Restaurant Group. Bob is Chair of the
Nomination Committee, the Pensions
Committee, the Market Disclosure Committee
and the Corporate Responsibility Committee.
Key to Committee membership
A
Audit Committee
R
Remuneration Committee
N
Nomination Committee
M
Market Disclosure Committee
E
Executive Committee
C
Corporate Responsibility Committee
P
Pensions Committee
Our broad range of Board talent covers a variety of professional
skills, and our diverse group of Non-Executive Directors continues
to bring much experience and challenge to the Board.
64 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Dave Coplin
Non-Executive Director
A
R
N
C
Appointed as an independent Non-Executive
Director in February 2016, Dave is the Chief
Executive Officer and founder of The
Envisioners Limited. He was formerly the Chief
Envisioning Officer for Microsoft Limited, and
is an established thought leader on the role of
technology in our personal and professional
lives. For over 30 years he has worked across a
range of industries and customer marketplaces,
providing strategic advice and guidance
around the role and optimisation of technology
in modern society, both inside and outside of
the world of work. Dave is also a Non-Executive
Director of each of the Pensions and Lifetime
Savings Association and Vianet Group plc.
Eddie Irwin
Non-Executive Director
N
C
Appointed as a Non-Executive Director in
March 2012, Eddie is a nominated shareholder
representative of Elpida Group Limited which,
as part of the Odyzean Group, is a significant
shareholder in Mitchells & Butlers. Eddie is
Finance Director of Coolmore, a leading
thoroughbred bloodstock breeder with
operations in Ireland, the USA and Australia
and a Non-Executive Director of Grove
Limited, the holding company of Barchester
Healthcare Limited. He graduated from
University College Dublin with a Bachelor
of Commerce Degree and he is a Fellow of
both The Association of Chartered Certified
Accountants and The Chartered Governance
Institute.
Keith Browne
Non-Executive Director
P
Appointed as a Non-Executive Director
in September 2016, Keith is a nominated
shareholder representative of Elpida Group
Limited, which, as part of the Odyzean Group,
is a significant shareholder in Mitchells &
Butlers. He is a Non-Executive Director of
Grove Limited, the holding company of
Barchester Healthcare Limited. Keith obtained
a Bachelor of Commerce Degree from
University College Dublin, qualified as a
chartered accountant in 1994 and subsequently
gained an MBA from University College Dublin.
After joining KPMG Corporate Finance in 1996,
he became a partner in the firm in 2001 and
Head of Corporate Finance in 2009. He retired
from the partnership to operate as an
Independent Consultant in 2011.
Jane Moriarty
Senior Independent Director
A
R
N
C
M
Appointed as an independent Non-Executive
Director in February 2019, Jane is a Fellow
of the Institute of Chartered Accountants in
Ireland, and currently a Non-Executive Director
of Babcock International Group PLC, NG Bailey
Group Limited, Quarto Group Inc., Tennants
Consolidated Limited and Nyrstar NV. Jane was
previously a senior advisory partner with KPMG
LLP. Jane is Chair of the Audit Committee.
Amanda Brown
Non-Executive Director
A
R
N
C
Amanda joined the Board in July 2022 as
an independent Non-Executive Director.
She is Remuneration Chair of Entain plc and
Manchester Airport Group, and was formerly
the Chief Human Resources Officer of Hiscox
Limited, and was a Non-Executive Director and
Chair of the Remuneration Committee of Micro
Focus International PLC. She previously held
senior executive roles with Whitbread Group
PLC, PepsiCo, Inc and Mars, Inc. Amanda is
Chair of the Remuneration Committee.
Josh Levy
Non-Executive Director
R
P
Appointed as a Non-Executive Director
in November 2015, Josh is a nominated
shareholder representative of Piedmont Inc.,
which, as part of the Odyzean Group, is a
significant shareholder in Mitchells & Butlers.
Josh is Co-Chief Executive Officer of Tavistock
Group, and a member of the Board of Directors
and Executive Committee. He also serves as
Chief Executive Officer of specialist asset-based
lender Ultimate Finance Group and is a
Non-Executive Director of the Australian
Agricultural Company, Australia’s largest
integrated cattle and beef producer.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 65
Governance
Directors’ report
The Board’s responsibilities in respect
of the Company include:
• Determining the overall business and commercial strategy;
• Identifying the Company’s long-term objectives;
• Reviewing the annual operating budget and financial plans
and monitoring performance in relation to those plans;
• Determining the basis of the allocation of capital; and
• Considering all policy matters relating to the Company’s activities
including any major change of policy.
For FY 2024, the Board is reporting under the 2018 Code. Further
information is set out in the Strategic Report on pages 18 to 58 which
examines the ‘purpose’ aspect of the 2018 Code and in the Corporate
Governance Statement on pages 75 to 87, which describes the
Company’s approach and practices in relation to the 2018 Code.
For the Company’s latest financial information
Go to www.mbplc.com/investors
The Directors present their report on the affairs of the Group and the
audited financial statements for the 52 weeks ended 28 September 2024.
The Business review and Sustainability review of the Company and its
subsidiaries are given on pages 20 to 22 and pages 38 and 39 respectively
which, together with the Corporate Governance Statement and Audit
Committee report, are incorporated by reference into this report and,
accordingly, should be read as part of this report.
Details of the Group’s policy on addressing risks are given on pages 46 to
52, 86 and 87, and details about financial instruments are shown in note
4.3 to the financial statements. These sections include information about
trends and factors likely to affect the future development and
performance of the Group’s businesses. The Company undertakes
no obligation to update forward-looking statements.
Key performance indicators for the Group’s businesses are set out
on pages 36 and 37.
The Company’s Directors pay due regard to the need to foster the
Company’s business relationships with suppliers, guests and others.
Details of the Company’s engagement process with various stakeholders
and different tiers of suppliers, together with the effect of such
consideration on the principal decisions taken by the Company during
the financial period, are set out in the section discussing the Company’s
business model on pages 26 to 29 and in the statement made in
compliance with Section 172 of the Companies Act 2006 set out
on page 54.
This report has been prepared under current legislation and guidance
in force at the year end date. In addition, the material contained on pages
18 to 58 reflects the Directors’ understanding of the requirement to
provide a Strategic Report.
This report has been prepared for, and only for, the members of the
Company as a body, and no other persons. The Company, its Directors,
employees, agents or advisers do not accept or assume responsibility to
any other person to whom this document is shown or into whose hands
it may come or who becomes aware of it and any such responsibility
or liability is expressly disclaimed.
Areas of operation
During FY 2024, the Group had activities in, and operated through, pubs,
bars and restaurants in the United Kingdom and Germany. In May 2024,
the Group acquired the entire share capital of Pesto Restaurants Ltd,
a group of 10 restaurants based in the UK. Further details are set out in
note 5.1 to the financial statements. A summary of the performance
of the business is set out on page 92.
A full list of the Company’s subsidiaries and their respective country
of operation is given on page 178 of the Annual Report.
Share capital and voting rights
The Company’s issued ordinary share capital as at 28 September 2024
comprised a single class of ordinary shares of which 598,057,671 shares
were in issue and listed on the London Stock Exchange (30 September
2023 597,726,859 shares). The rights and obligations attaching to the
ordinary shares of the Company are contained within the Company’s
Articles of Association.
Of the issued share capital, no shares were held in treasury and the
Company’s employee share trusts held 5,512,147 shares. Details of
movements in the issued share capital can be found in note 4.7 to the
financial statements on page 174.
Each share carries the right to one vote at general meetings of the
Company. The notice of the Annual General Meeting specifies deadlines
for exercising voting rights in relation to the resolutions to be proposed
at the Annual General Meeting.
All issued shares are fully paid up and carry no additional obligations
or special rights. There are no restrictions on transfers of shares in the
Company, or on the exercise of voting rights attached to them, other than
those which may from time to time be applicable under existing laws and
regulations and under the Articles of Association. In addition, pursuant
to the UK Listing Rules of the Financial Conduct Authority, Directors and
certain officers and employees of the Group require the prior approval
of the Company to deal in the ordinary shares of the Company.
Participants in the Share Incentive Plan (‘SIP’) may complete a Form
of Instruction which is used by Equiniti Share Plan Trustees Limited,
the SIP Trustee, as the basis for voting on their behalf.
During the period, shares with a nominal value of £28,257 were allotted
under all-employee schemes as permitted under Section 549 of the
Companies Act 2006. No securities were issued in connection with
a rights issue during the period.
66 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
The Company is not aware of any agreements between shareholders
that restrict the transfer of shares or voting rights attached to the shares.
Interests of the Directors and their immediate families in the issued share
capital of the Company as at the year end are shown on page 110 in the
Report on Directors’ remuneration.
Dividends
No Final Dividend will be paid in respect of the financial period ended
28 September 2024 (FY 2023 nil). No Interim Dividend was paid during
the period (FY 2023 nil).
Interests in voting rights
As at 28 September 2024, the Company was aware of the significant
holdings of voting rights (3% or more) in its shares shown in Table 1 below.
Table 1: Interests in voting rights as at 28 September 2024
Shareholder Ordinary shares
% of
share capital
a
Odyzean Limited
b
338,833,695 56.66% Indirect holding
Artemis Investment
Management LLP
29,976,671 5.01% Indirect holding
Lansdowne Partners
(UK) LLP
29,633,363 4.95% Indirect holding
Standard Life
Aberdeen plc
29,260,403 4.89% Indirect holding
Standard Life
Aberdeen plc (rights
to recall lent shares)
170,000 0.03% Indirect holding
a. Based on the total voting rights figure as at 28 September 2024 of 598,057,671
shares.
b. As the parent company of each of Piedmont Inc., Elpida Group Limited and
Smoothfield Holding Ltd.
Percentages are rounded to two decimal places.
On 24 October 2024, Artemis Investment Management Limited
increased its holding to 36,408,331 shares (6.08%).
Directors
Details of the Board Directors as at 26 November 2024 and their
biographies are shown on pages 64 and 65. The Directors as at
28 September 2024 and their interests in shares are shown on page 110.
In relation to the appointment and removal of Directors the Company
is governed by its Articles of Association and the Companies Act 2006
and related legislation. The powers of the Company’s Directors are set
out in the Company’s Articles of Association.
In accordance with the Company’s Articles of Association (which are
in line with the best practice guidance of the 2018 Code) all the Directors
will retire at the Annual General Meeting and will offer themselves
for re-election.
Major shareholder Board representation
and relationship agreement
The Company’s largest shareholder is Odyzean Limited (‘Odyzean’),
which holds approximately 56.66% of the Company’s issued share
capital and was formed in 2021 to consolidate the shareholdings of the
Company’s then three largest shareholders, Piedmont Inc. (‘Piedmont’),
Elpida Group Limited (‘Elpida’) and Smoothfield Holding Limited
(‘Smoothfield’) (together with Odyzean, the ‘Odyzean Group’)
in connection with the Open Offer.
The Board is grateful for the significant financial commitment provided
by the Odyzean Group to the business, together with its 1,726 pubs and
restaurants, and over 50,000 UK and German employees. The Company
maintains excellent relations with the Odyzean Group, whose investment
objectives are fully aligned with those of the Group. The Odyzean Group
maintains a dialogue with the Board via their representatives on the
Board nominated by Piedmont and Elpida, all of whom are careful to
ensure that there is no conflict between their roles as representatives
of the Company’s shareholders and their duty to the Company.
The Odyzean Group has representatives on the Board, nominated by
Piedmont and Elpida respectively. Piedmont’s appointment rights are
formalised in the Deed of Appointment referred to in this report but there
is no equivalent agreement in place between the Company and Elpida.
The Elpida representatives were appointed with the approval of the Board
in March 2012 and September 2016. The Board has carefully considered
whether it would be appropriate to enter into a formal agreement with
Elpida that is similar to the existing agreement between the Company and
Piedmont. Having taken into account the Financial Reporting Council’s
report of August 2014 ‘Towards Clear & Concise Reporting’ and the views
expressed previously by certain investor representative bodies, the Board
considers that such an agreement would be merely one of form rather
than substance and not in the interests of shareholders generally. As a
result, the Board does not propose, currently, that the Company should
enter into such an agreement with Elpida, and Elpida has not, to date,
sought such an agreement.
Under a Deed of Appointment between Piedmont and the Company,
Piedmont has the right to appoint two shareholder Directors to the Board
whilst it owns 22% or more of the issued share capital of the Company,
and the right to appoint one shareholder Director to the Board whilst
it owns more than 16% of the Company but less than 22%. In the event
that Piedmont owns less than 16% of the Company any such shareholder
Directors would be required to resign immediately. This Deed of
Appointment also entitles Piedmont to appoint one Director to sit
on the Nomination Committee and to have a Director attend, and receive
all the papers relating to, meetings of the Remuneration Committee.
The Board confirms that the Company is able to carry on the business
it carries on as its main activity independently from Odyzean.
There is a requirement to disclose the parent and ultimate controlling
party of the Company where this is different. There is no parent or
ultimate controlling party as such of Mitchells & Butlers plc. However, as
disclosed in the table of ‘Interests in voting rights’, and the section headed
‘Major shareholder Board representation and relationship agreement’,
both on this page, Odyzean, as the indirect holder of the separate
shareholdings of Piedmont, Elpida and Smoothfield has disclosed its
interest in 56.66% of the shares in the Company. Odyzean, however,
does not directly hold any shares in the Company on its own behalf.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 67
Governance
Directors’ report continued
Directors’ indemnity
As permitted by the Articles of Association, each of the Directors has
the benefit of an indemnity, which is a qualifying third-party indemnity
as defined by Section 234 of the Companies Act 2006. The indemnity
was in force throughout the tenure of each Director during the period,
and is currently in force. The Company also purchased and maintained
throughout the period Directors’ and Officers’ liability insurance in
respect of itself and its Directors and the directors of any subsidiary
of the Company. No indemnity is provided for the Company’s auditor.
Articles of Association
The Articles of Association may be amended by special resolution
of the shareholders of the Company.
Conflicts of interest
The Company’s Articles of Association permit the Board to consider and,
if it sees fit, authorise situations where a Director has an interest that
conflicts, or may possibly conflict, with the interests of the Company
(‘Situational Conflicts’). The Board has a formal system in place for
Directors to declare Situational Conflicts to be considered for
authorisation by those Directors who have no interest in the matter being
considered. In deciding whether to authorise a Situational Conflict, the
non-conflicted Directors are required to act in the way they consider
would be most likely to promote the success of the Company for the
benefit of all shareholders, and they may impose limits or conditions
when giving authorisation, or subsequently, if they think this is appropriate.
The Board believes that the systems it has in place for reporting and
considering Situational Conflicts continue to operate effectively.
Related party transactions
Internal controls are in place to ensure that any related party transactions
involving Directors or their connected persons are carried out on an
arm’s-length basis and are properly recorded.
The related party transactions in FY 2024 to which the Group was party
are set out in note 5.2 to the financial statements.
Change of control provisions
There are no significant agreements which contain provisions entitling
other parties to such agreements to exercise termination or other rights
in the event of a change of control of the Company.
There are no provisions in the Directors’ or employees’ service
agreements providing for compensation for loss of office or employment
occurring because of a takeover.
The trustee of the Company’s SIP will invite participants on whose behalf
it holds shares to direct it how to vote in respect of those shares, and, if
there is an offer for the shares or other transaction which would lead to a
change of control of the Company, participants may direct it to accept the
offer or agree to the transaction. The trustee of the Mitchells & Butlers
Employee Benefit Trust may, having consulted with the Company, vote
or abstain from voting in respect of any shares it holds or accept or reject
an offer relating to shares in any way it sees fit, and it may take all or any
of the following matters into account: the long-term interests of
beneficiaries; the non-financial interests of beneficiaries; the interests
of beneficiaries in their capacity as employees or former employees;
the interests of future beneficiaries; and considerations of a local, moral,
ethical, environmental or social nature.
The rules of certain of the Company’s share plans include provisions
which apply in the event of a takeover or reconstruction, as set out
in Table 2 below.
Table 2: Provisions which apply in the event of a takeover
or reconstruction
Share plan Provision in the event of a takeover
2013 Short Term Deferred
Incentive Plan and 2023
Short Term Deferred
Incentive Plan
Bonus shares may be released or
exchanged for shares in the new
controlling company
2013 Sharesave Plan and
2023 Sharesave Plan
Options may be exercised within six
months of a change of control
Share Incentive Plan Free shares may be released or
exchanged for shares in the new
controlling company
Restricted Share Plan Awards either vest having regard to
achievement of applicable underpin
conditions and, at the discretion of
the Board, time pro-rating or are
exchanged for an equivalent award
in the new controlling company
Performance Share Plan Awards either vest having regard to
achievement of applicable
performance conditions and, at the
discretion of the Board, time pro-rating
or are exchanged for an equivalent
award in the new controlling company
Shareholders approved the Company’s existing Directors’ remuneration
policy at the AGM in 2024 for a period of three years from the date of that
meeting. That vote, which is binding on the Company, remains in force
until 2027, and thus a new Directors’ remuneration policy will require
approval at the 2027 AGM. Further details are set out in the Report on
Directors’ remuneration.
The Company was authorised by shareholders at its AGM in 2024 to
purchase its own shares up to a maximum of 29,886,342 ordinary shares,
representing approximately 5% of its issued ordinary share capital. The
Company has not used this authority during FY 2024. The Company
intends to renew this authority at the 2025 AGM.
Additional disclosures
Other information that is relevant to the Directors’ report, and which
is incorporated by reference into this report, can be located as follows:
Page(s)
Future developments of the business 18 to 58
Research and development 26 to 29
Financial instruments and financial risk management 156 and 158
Greenhouse gas emissions 71 to 73
Corporate governance statement 75 to 87
Employee involvement 70
Employees with disabilities 69
Non-financial reporting 18 to 58
Stakeholder engagement 77
Section 172 statement 54
68 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Disclosures required pursuant to the UK Listing Rules can be found
on the following pages:
Page(s)
Information required by UK Listing Rule 6.6.1R
1. Long-term incentive schemes 92 to 112
2. Allotment of shares during the period 174
3. Significant contracts 67
4. Significant related party agreements 67
5. Relationship agreement 67
Information required by UK Listing Rule 6.6.6R
6. Directors’ interests 110
7. Significant shareholders (DTR 5) 67
8. Going concern statement 58
9. Shareholder buyback authorities 68
10. Statement of corporate governance 75 to 87
11. Details of Directors’ service contracts 110
12. Climate-related financial disclosures consistent
with TCFD
40 to 45
13. Board diversity 78
The Company has chosen, in accordance with section 414C(11) of the
Companies Act 2006, and as noted in this Directors’ report, to include
certain matters in its Strategic Report that would otherwise be required
to be disclosed in this Directors’ report. The Strategic Report can be
found on pages 18 to 58 and includes an indication of future likely
developments in the Company, details of important events and the
Company’s business model and strategy.
Employment policies
The Group employed an average of 50,455 people in FY 2024 (FY 2023
49,150). Through its diversity and equality policy, the Company seeks
to ensure that every employee, without exception, is treated equally
and fairly and that all employees are aware of their responsibilities. The
Company takes harassment of any type very seriously and this year has
introduced training for all employees that clearly outlines the Company’s
expectations, and what employees should do if they are subject to,
or a witness of, harassment of any type. This training also explains the
importance of diversity and inclusion in the workplace and supports our
broader DEI agenda.
Our policies and procedures fully support our disabled colleagues.
We take active measures to do so via:
• a robust reasonable adjustment policy;
• disability-specific online resources (accessible via the Group’s online
recruitment system); and
• processes to ensure colleagues are fully supported.
The Group is responsive to the needs of its employees. As such, should
any employee of the Group become disabled during their time with us,
we will actively retrain that employee and make reasonable adjustments
to their working environment where possible, in order to keep the
employee with the Group. It is the policy of the Group that the
recruitment, training, career development and promotion of disabled
persons should, as far as possible, be identical to that of other employees.
Employee engagement
Mitchells & Butlers engages with its employees on a regular basis and
in a number of ways to suit their different working patterns and this is
discussed further in the Report on Directors’ remuneration on page 92.
Engagement includes:
• line manager briefings;
• communications forums and roadshows held by functions or brands
across the Company;
• a dedicated intranet for the Retail Support Team and Retail
Management;
• ‘Mable’, the Mitchells & Butlers online learning platform;
• email news alerts;
• focus groups;
• weekly bulletins – specifically targeted at retail house managers
and mobile workers; and
• employee social media groups.
Details of the financial and economic factors affecting the performance
of the Company are shared with all employees at the appropriate time
using the methods listed above. In line with the requirements of the 2018
Code, the Board agreed that Dave Coplin will act as a link to the Board
for employees in order to strengthen the ‘employee voice’ at the Board.
This involves attending employee forums, focus groups and providing
feedback on values and behaviours, employee development and
upskilling and ensuring that feedback is listened to and acted upon
where appropriate.
As part of this role, Dave Coplin uses the insight he has gained to provide
the Board with an employee perspective across a range of issues, which
the Board considers to be very valuable. Dave meets regularly with
senior members of the Human Resources team and is also supporting
the business in how it may utilise technology to better communicate with
employees. In addition, as a member of the Remuneration Committee
his insight is also very helpful in the context of Executive pay.
Updates on employee matters are normally presented to the
Remuneration Committee or Board at least twice a year and cover a wide
range of issues. Over the course of FY 2024 these updates have focused
on employee engagement and specifically detailed feedback from the
two engagement surveys held during the year, a review of bonus and
incentive schemes below Executive Committee level, progress against
our diversity and inclusion agenda and plans to roll out a new talent
management system that will help to support the development
of our people.
The Remuneration Committee is also informed where significant changes
are proposed to employment conditions and policies elsewhere in the
Group, or if there are important employee-related projects underway.
More detail on how the Remuneration Committee takes into account
wider workforce polices and the views of employees in relation to
Executive pay can be found on page 102.
We provide opportunities for employees to give their feedback to the
Company in a number of ways, from team or shift meetings in pubs,
bars and restaurants and engagement surveys for all employees to the
Mitchells & Butlers Business Forum. Business Forum representatives
collect questions from employees across the Company and put them
to members of the Executive Committee. The questions and answers
are communicated to employees.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 69
Governance
Directors’ report continued
The Mitchells & Butlers ‘People Promise’
Our clearly defined people promise enables us to differentiate our
employment proposition, and the diagram below illustrates in more detail
the elements of our people promise. Clearly, pay is a very important
element but other factors also play an important part of the overall value
proposition, which is known internally as our ‘People Promise’.
Our people value opportunities for progression, challenge within their
role, fair rewards and a safe working environment. Our research has also
shown that, in normal times, unlike some industries and employers,
Mitchells & Butlers offers a number of important differentiators which
our employees value:
• Flexibility and convenience: Mitchells & Butlers has always promoted
a flexible approach to working from the frontline through to our
support centre. The Covid-19 pandemic has further demonstrated
how flexibility and convenience are ever more important factors for
employees across all employee groups.
• More job satisfaction: As part of our research, we learnt that working
for Mitchells & Butlers gave employees a strong sense of family and
that employees put a high value on the day-to-day variety of work.
This comes through very strongly in our survey results.
• A great atmosphere: Undoubtedly working in hospitality, especially
at the frontline, is hard work. However, we also know that it can be
great fun. Our aim at Mitchells & Butlers is to make the working
environment as fun and friendly as possible whilst ensuring that
guests receive great service.
It remains the case that employees have begun to reassess what is
important to them and their work following the Covid-19 pandemic and
now in response to cost of living pressures. In addition, other industries
have been able to demonstrate how they now can offer careers that
provide some elements of our proposition in a way not seen before,
for example through very flexible working arrangements. It is therefore
important to review and refresh our research so that our ‘People Promise’
evolves and remains relevant to current and prospective team members.
We expect ourpeople to
SERVE WITH PRIDE
(as they have since 1898!)
Like many employers, opportunities for progression,
challenge, fair rewards & safety and security
A better lifestyle,
because of the flexibility
and convenience
More job satisfaction,
because of the sense of community,
the feeling of belonging, the shared
purpose, the variety of work and
pride in their achievements
A great atmosphere,
because it’s both fun
and friendly
All this adds up to our
big promise – that you’ll
But unlike many employers, also:
In return, we offer:
F
U
N
Share ownership
Mitchells & Butlers is keen to encourage greater employee involvement
in the Group’s performance through share ownership. It operates two
HMRC approved all-employee plans, which are the Sharesave Plan (both
the 2013 and 2023 versions) and the Share Incentive Plan (which includes
Partnership shares). Further details on the plans are set out in the Report
on Directors’ remuneration on pages 92 to 112.
The Company also operates three other plans on a selective basis, which
are the Short Term Deferred Incentive Plan (both the 2013 and 2023
versions), the Restricted Share Plan and the Performance Share Plan.
During the year, the Company has remained within its headroom limits
for the issue of new shares for share plans as set out in the rules of the
above plans. The Company uses an employee benefit trust to acquire
shares in the market when appropriate to satisfy share awards in order
to manage headroom under the plan rules. A total of 2,500,000 shares
were purchased by the employee benefit trust during FY 2024.
Responsible alcohol policy
Mitchells & Butlers operates the Challenge 21 policy in all our businesses
across England and Wales, a Challenge 25 policy in our Scottish businesses
and similar policies in Northern Ireland and Germany. The policy requires
that any guest attempting to buy alcohol who appears under the age of 21
in England, Wales or Northern Ireland (or 25 in Scotland) must provide an
acceptable form of proof of age ID to confirm that they are over 18 before
they can be served. We employ similar policies across the various regions
of Germany in order to comply with local laws.
All of these policies form part of our regular training for our employees
on their responsibilities for serving alcohol.
Political donations
The Company made no political donations during the year and intends
to maintain its policy of not making such payments. It will, however, as
a precautionary measure to avoid inadvertent breach of the law, seek
shareholder authority at its 2025 AGM to make limited donations or incur
limited political expenditure, although it has no intention of using the
authority.
Modern Slavery Act 2015
In accordance with the requirements of the Modern Slavery Act, a copy
of the Company’s Modern Slavery Act compliance statement, signed on
behalf of the Board by Phil Urban, can be accessed on the Company’s
website, www.mbplc.com
70 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
This statement covers the Company’s commitment to operating and
conducting its business in such a way that human rights are respected
and protected. Mitchells & Butlers will not permit or condone any form
of slavery, servitude, forced or compulsory labour or human trafficking.
It clearly states how the Company is committed to ensuring that there is
no modern slavery or human trafficking in its supply chains or in any part
of its businesses and this is reflected in the Mitchells & Butlers Modern
Slavery & Human Trafficking Policy and Supplier Code of Conduct. The
statement also covers due diligence processes for slavery and human
trafficking, supply chain accountability, Company accountability
(including ethical and socially responsible conduct in the workplace),
training and information and reviewing key performance indicators to
measure how effective we have been to ensure that slavery and human
trafficking is not taking place in any part of our business and supply chain,
in terms of record keeping and actions taken to strengthen supply chain
due diligence, auditing and verification.
Phil Urban has ultimate responsibility for employment-related issues
and he also oversees matters relating to human rights including the
implementation of the Modern Slavery Act throughout the Group.
Annual General Meeting
The notice convening the Annual General Meeting is contained in a
circular sent to shareholders with this report and includes full details
of the resolutions proposed.
Auditor
KPMG LLP has expressed its willingness to continue in office as auditor
of the Company and its reappointment will be put to shareholders at
the AGM.
Funding and liquidity risk
In order to ensure that the Group’s long-term funding strategy is aligned
with its strategic objectives, the Treasury Committee regularly assesses
the maturity profile of the Group’s debt, alongside the prevailing financial
projections and three year plan. This enables it to ensure that funding
levels are appropriate to support the Group’s plans.
The current funding arrangements of the Group consist of the securitised
notes issued by Mitchells & Butlers Finance plc (and associated liquidity
facility) and £200m of unsecured committed bank facilities (increased
by £50m during the prior year). Further information regarding these
arrangements is set out on page 58 and is also included in note 4.1 to the
financial statements on page 154. The terms of the securitisation and the
bank facilities contain a number of financial and operational covenants.
Compliance with these covenants is monitored by Group Treasury.
The Group prepares a rolling daily cash forecast covering a six-week
period, a four-weekly update on six-month forward-looking cash
forecasts and an annual cash forecast by period. These forecasts
are reviewed and used to manage the investment and borrowing
requirements of the Group. A combination of cash pooling and zero
balancing agreements is in place to ensure the optimum liquidity position
is maintained. Committed facilities outside of the securitisation are sized
to ensure that the Group can meet its medium-term anticipated cashflow
requirements. Short-term cash management is optimised through
regular discussions considering projected cash inflows and outflows.
During FY 2022, the Group completed the necessary amendments to
transition its financing arrangements in advance of the discontinuation of
LIBOR as a floating reference rate, replacing LIBOR with a SONIA-based
rate in respect of sterling and a SOFR-based rate in respect of US dollars.
The amendments in respect of the securitised bonds were agreed by the
Bondholders through a formal consent solicitation process and bilateral
agreements were reached with securitised swap and liquidity facility
providers (using amended reference rates consistent with those agreed
under the bonds). The unsecured committed facility was extended on
a SONIA basis in July 2023.
Going Concern
After considering forecasts, sensitivities and mitigating actions available
to management and having regard to risks and uncertainties, the
Directors have a reasonable expectation that the Group has adequate
resources to continue to operate within its borrowing facilities and
covenants for a period of at least 12 months from the date of signing the
financial statements. Accordingly, the financial statements have been
prepared on the going concern basis. Full details are included in Section
1 of the notes to the financial statements.
Events after the balance sheet date
There are no post-balance sheet events to report.
Greenhouse gas (‘GHG’) emissions statement
The Group generates GHG emissions throughout its estate of bars
and restaurants for heating, cooling, ventilation, lighting, and catering
including the refrigeration and preparation of food and drink.
Location-based GHG emissions per £m turnover have decreased by
8% in FY 2024 in comparison to FY 2023. Market-based GHG emissions
per £m turnover have decreased by 11% for the same period. Absolute
emissions for Scope 1 & 2 (location- and market- based) have decreased
by 6%. This is due to the following key factors:
1. FY 2024 contains seven fewer days when compared to FY 2023;
2. Realisation of the benefit from the efficiency measures that we have
rolled out as well as decreasing our fugitive (f-gas) emissions; and
3. An increase in revenue generated in FY 2024 compared to FY 2023.
We have also continued with our commitment to purchase a green,
REGO-backed supply of electricity from renewable sources in FY 2024.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 71
Governance
Directors’ report continued
Table 3: Mitchells & Butlers’ carbon reporting disclosure
Assessment parameters
Assessment year FY 2024
Consolidation approach Financial control
Boundary summary All bars and restaurants either owned or under operational control during FY 2024 were included.
Scope General classifications of greenhouse gas emissions scopes based on the GHG protocol and ISO14064-1:2006
within the context of the Group’s operations are as follows:
Scope 1 – direct greenhouse gas emissions from sources that are owned or controlled by the Group, e.g., fuel
combustion of varying types, occurs during kitchen activity and to generate heating and domestic hot water most
commonly through natural grid supplied gas, but also some LPG (Liquefied Petroleum Gas) and oil. Real fires
fuelled by logs or coal are also used to supplement customer comfort and enhance ambience.
Scope 2 – GHG emissions from the generation of purchased electricity used during kitchen activity and for
lighting, heating, and cooling as well as from company electric vehicles.
Scope 3 – indirect emissions from activities up and down the Group’s value chain but occurring from sources
not owned or controlled by the Group.
This assessment focuses on Scope 1 & 2 emissions only (Scope 3 is optional under the current regulations).
Consistency with the
financial statements
Scope 1 & 2 emissions are reported for both FY 2024 and FY 2023 on a financial year basis.
Franchise sites are excluded as they are responsible for arranging and paying for their own energy.
Alex sites in Germany are included. Emissions are based on UK-average emissions per outlet multiplied by the
number of Alex sites. These sites make up the non-UK aspect of this report.
Exclusions Scope 1 – Wood, charcoal, and kerosene are excluded because each of these amounts to less than 1% of total
emissions which falls below the materiality threshold.
Emission factor data source All carbon emission factors used are sourced from the UK Government GHG conversion factors for company
reporting 2024.
Assessment methodology Environmental Reporting Guidelines: including Streamlined Energy and Carbon Reporting Guidelines
March 2019.
Materiality threshold All emission types estimated to contribute >1% of total emissions are included.
Estimation Scope 1 – Fugitive Emissions are partially estimated due to unknown gas types for some sites.
Scope 1 & 2 – Electricity and gas consumption uses a pro-rata estimate for supplies that do not have complete
data in the reporting year.
Intensity threshold Emissions are stated in tonnes CO
2
e per £m revenue. This intensity ratio puts emissions into context given the scale
of the Group’s activities and enables comparison with prior year performance.
Target Emissions during FY 2023 are provided for comparative purposes.
Energy efficiency action taken
During FY 2024 we continued our deployment of local renewable energy and low carbon technology sources including solar photovoltaic and air
source heat pumps. We have continued to expand the roll out of the Internet of Things (IoT) solution, which involves installing remote sensors and
controllers for lighting, catering, and heating/cooling systems. Expansion of these systems will continue throughout FY 2025 and beyond.
In addition to the technological solutions adopted we have also continued to improve our staff awareness and engagement in energy use and carbon
emissions. We have a team of energy ambassadors who work across the business, who are trained to support General Managers to investigate and
resolve issues resulting in energy exceedances and to identify opportunities for optimising energy use and reducing consumption.
Commentary
Both location- and market-based reporting methodologies are used. Scope 2 location-based emissions use UK grid average emissions. Scope 2
market-based emissions account for the electricity purchased within the UK portfolio from REGO-backed sources which result in zero emissions.
For transparency we have reported two intensity ratios; a location-based ratio and a market-based ratio for both Scope 1 & 2 emissions.
72 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Global GHG emissions and energy use data for FY 2024
Current reporting period FY 2024 Comparison reporting period FY 2023
UK and
offshore
Global (excluding
UK and offshore) Total
UK and
offshore
Global
(excluding UK
and offshore) Total
% Change
year-on-year
Scope 1 tCO
2
e
(location-based) 82,311 2,219 84,530 88,960 2,342 91,302 -7%
Scope 2 tCO
2
e
(location-based) 64,927 1,780 66,707 67,156 1,769 68,925 -3%
Total Scope 1 & 2 emissions tCO
2
e
(location-based) 147,238 3,999 151,237 156,116 4,111 160,227 -6%
Total Scope 1 & 2 emissions tCO
2
e
(market-based) 83,980 4,000 87,980 89,222 4,111 93,333 -6%
Energy Consumption used to
calculate the above emissions: kWh 716,909,464 19,454,275 736,363,739 731,867,092 19,356,686 751,223,778 -2%
Intensity Ratio: tCO
2
e/turnover (£m)
– (location-based)
a
– – 59 – – 64 -8%
Intensity Ratio: tCO
2
e/turnover (£m)
– (market-based)
a
– – 33 – – 37 -11%
a. Intensity ratios based on the turnover for FY 2023 of £2,503m and for FY 2024 of £2,610m.
Disclosure of information to auditor
Having made the requisite enquiries, so far as the Directors are aware, specifically those who are a Director at the date of approval of the Annual
Report, there is no relevant audit information (as defined by Section 418(3) of the Companies Act 2006) of which the Company’s auditor is unaware
and each Director has taken all steps that ought to have been taken to make themselves aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
This report, which includes the Strategic Report, has been approved by the Board and is signed on its behalf.
Andrew Freeman
Group General Counsel and Company Secretary
26 November 2024
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 73
Governance
Statement of Directors’ responsibilities in respect of the
Annual Report and Accounts
The Directors are responsible for preparing
the Annual Report and Accounts and the
Group and parent Company financial
statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial period. Under that law
they are required to prepare the Group financial statements in accordance
with UK-adopted international accounting standards and applicable law
and have elected to prepare the parent Company financial statements in
accordance with UK accounting standards and applicable law, including
FRS 101 Reduced Disclosure Framework.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and parent Company and of the Group’s
profit or loss for that period. In preparing each of the Group and parent
Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant
and reliable;
• for the Group financial statements, state whether they have
been prepared in accordance with UK-adopted international
accounting standards;
• for the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the parent
Company financial statements;
• assess the Group and parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
• use the going concern basis of accounting unless they either intend
to liquidate the Group or the parent Company or to cease operations,
or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the parent Company’s transactions
and disclose with reasonable accuracy at any time the financial position
of the parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Group and to prevent and detect fraud
and other irregularities.
Under applicable law and regulations, the Directors are also responsible
for preparing a Strategic Report, Directors’ report, Report on Directors’
remuneration and Corporate Governance Statement that comply with
that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule (‘DTR’)
4.1.16R, the financial statements will form part of the annual financial
report prepared under DTR 4.1.17R and 4.1.18R. The auditor’s report on
these financial statements provides no assurance over whether the annual
financial report has been prepared in accordance with those requirements.
Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable
set of accounting standards, 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; and
• the Strategic Report includes a fair review of the development
and performance of the business and the position of the issuer
and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face.
We consider the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Group’s position and performance,
business model and strategy.
Tim Jones
Chief Financial Officer
26 November 2024
74 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Corporate governance statement
The Board is responsible for ensuring that
the activities of the Group and its various
businesses are conducted in compliance with
the law, regulatory requirements and rules,
good practices, ethically and with appropriate
and proper governance and standards.
This includes reviewing internal controls, ensuring that there is an
appropriate balance of skills and experience represented on the Board,
compliance with the applicable UK Corporate Governance Code, which
is issued by the Financial Reporting Council and which is available at
www.frc.org.uk, and maintaining appropriate relations with shareholders
and other stakeholders.
The latest financial information for Mitchells & Butlers and its Group of
companies is included in the 2024 Annual Report and Accounts (of which
this Corporate Governance Statement forms part) and which is available
online at: www.mbplc.com/investors.
Shareholder relations
The Board recognises that it is accountable to shareholders for the
performance and activities of the Company. The Company regularly
updates the market on its financial performance, at the half year and
full year results in May and November respectively, and by way of other
announcements as required. The content of these updates is available
by webcast on the Company’s website www.mbplc.com, together
with general information about the Company so as to be available to all
shareholders. The Company has a regular programme of dialogue with
its larger shareholders which provides an opportunity to discuss, on the
basis of publicly available information, the progress of the business.
“This statement sets out our report to
shareholders on the status of our corporate
governance arrangements.”
Bob Ivell
Chair
On a more informal basis, the Chair, the Chief Executive and the
Chief Financial Officer regularly report to the Board the views of
larger shareholders about the Company, and the other Non-Executive
Directors are available to meet shareholders on request and are offered
the opportunity to attend meetings with larger shareholders.
The AGM provides a useful interface with shareholders, many of whom
are also guests in our pubs, bars and restaurants. All proxy votes received
in respect of each resolution at the AGM are counted and the balance
for and against, and any votes withheld, are indicated.
At the January 2024 Annual General Meeting, the Company had two
resolutions where 20% or more of votes cast were cast against the
resolution, namely in respect of the re-election of both Bob Ivell (Chair),
and Josh Levy. These resulted in the Company featuring in the
Investment Association’s public register of shareholder dissent.
Our understanding was that the vote against Bob Ivell was the result
of the composition of the Board, the perceived lack of diversity on the
Board, and the fact that he had served on the Board for 12 years. The
composition of the Board, including its gender balance, is dealt with
by the Nomination Committee on a regular basis, and the importance
of having diversity on the Board is acknowledged, including female
representation. The Board Diversity Policy and progress against that
policy are clearly explained in this Annual Report, including confirmation
that any future appointments will continue to take into account diversity,
not only in terms of gender but also in terms of the appropriate mix of
skills and experience and that all Board appointments will always be
made on merit. As regards his tenure, the Board recognises his extensive
industry experience which has been of great assistance to the Company
in addressing, amongst other things, industry pressures.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 75
Governance
Corporate governance statement continued
We understand that the votes against the re-election of Josh Levy were
due to insufficient independence on the Board and apparent concerns
about the presence of Mr Levy on the Remuneration Committee.
Josh Levy is a shareholder representative of Piedmont Inc., which in
turn is a member of the Odyzean Group which, as a substantial majority
stakeholder in the business, wishes to have significant representation on
the Board. The Company has explained the circumstances of Mr Levy’s
presence on the Board and his committee role in detail, both in this and
previous Annual Reports.
In relation to the issues raised, and as in previous years, the Company’s
response to its inclusion in that register can be found in the register itself
and on the Company’s website www.mbplc.com. That open letter in
reply to the Investment Association sets out the Company’s position,
which remains as set out in the published letter.
The UK Corporate Governance Code (the ‘Code’) contains best practice
recommendations in relation to corporate governance yet acknowledges
that, in individual cases, these will not all necessarily be appropriate for
particular companies. Accordingly, the Code specifically recognises the
concept of ‘comply or explain’ in relation to divergences from the Code
which reflect the specific circumstances of individual companies.
No changes to the Board were made during the year and the Board
currently consists of nine members, three of whom are independent
Non-Executive Directors (including two female independent Non-
Executive Directors). A more detailed explanation is set out on page 78.
Corporate governance arrangements during FY 2024
In FY 2024 the Board maintained its regular set of scheduled meetings.
The details of the number of meetings of the Board and the Audit and
Remuneration Committees in the period are set out on page 60.
The Executive Committee, which is the principal operational decision-
making forum of the Group, continued with its monthly cycle of meetings
in FY 2024, and the output of its meetings was reported to the Board.
The Executive Committee addressed in particular all stakeholder
arrangements including the relationships and dialogue with employees,
shareholders, supplier arrangements and the Group’s pension arrangements.
Employee wellbeing arrangements
and workplace implications
The Company has an established wellbeing strategy that encompasses
five pillars of wellbeing: social, environmental, physical, mental and
financial. Within these pillars there are a range of resources and tools
available for line managers and employees to access, including:
• our employee assistance programme which is run by the Licensed
Trade Charity. They operate a free, 24/7 confidential helpline and
a website available to all employees;
• an online wellbeing centre that provides access to workout videos,
nutritional advice, financial wellbeing tools and mindfulness and
meditation videos and articles;
• financial wellbeing tools and support;
• mental health training available for all line managers, developed
in conjunction with the Samaritans, to assist them in supporting
their teams;
• wellbeing days and events, which are now often held virtually
and this will enable all employees to participate in various activities
and workshops; and
• menopause awareness training for employees and line managers.
Corporate governance code reporting
For FY 2024, the Company has reported under the 2018 Code. Its
requirements include:
1. enhanced board engagement with the workforce and wider
stakeholders, including describing how the Company complies with
its obligations to take into account stakeholder views pursuant to
Section 172 of the Companies Act 2006;
2. demonstration of a clear business strategy aligned with a healthy
corporate company culture;
3. a high-quality and diverse board composition; and
4. proportionate executive remuneration that supports the long-term
success of the business.
The Board established a Corporate Responsibility Committee in
June 2019. The purpose of this Committee is to allow more executive,
leadership and functional management involvement in key areas of
significant importance including environmental impacts of the Group’s
activities, community relationships and the role of the Company in
society. The existence of this Committee demonstrates a significant
commitment to the enhancement of governance in general and matters
such as stakeholder engagement. More details of this Committee and
its membership are set out on page 83 and its Terms of Reference are
on the Company’s website www.mbplc.com.
Alignment to the 2018 Code
As part of its alignment with the 2018 Code, the following operational
and administrative framework is in place.
1. Enhanced Board engagement with the workforce
and wider stakeholders
The 2018 Code recommends that the Board should consider wider
stakeholder views, in particular implementing arrangements for gathering
the views of the workforce. The 2018 Code permits a designated
Non-Executive Director to fill this role and in 2019 the Board designated
Dave Coplin for this role. The purpose of this appointment under the
2018 Code is to gather employee views, ensure employee views are
taken into account in Board discussions and decision-making, and
engage with the workforce to explain how executive remuneration aligns
with the Company’s remuneration policy. This commenced in FY 2019
with Dave Coplin being introduced to those executive managers who
could help ensure that meetings and site visits were effective. Progress
has continued to date.
Mitchells & Butlers has an Employee Forum with elected representatives
which normally meets with the Executive Directors and members of
the Executive Committee twice a year. Dave Coplin also attends these
meetings. During FY 2024 two meetings were held in March and
September. Questions from the workforce in general are sought through
the intranet to seek areas of concern or enquiry and to enable the
Company to respond. The Employee Forum will, from time to time,
be provided with an overview of how executive pay is aligned with
the Company’s strategic objectives. The Terms of Reference of the
Employee Forum reflect this. Further details on employee engagement
can be found in the Report on Directors’ remuneration on page 92.
The results of regular Board roadshows are used to update managers
on performance and the latest developments affecting the Group,
and employee feedback is included in Board papers where appropriate
as part of the decision-making process.
76 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
2. A clear business strategy aligned with a healthy corporate
company culture
In July 2018 the Financial Reporting Council published ‘Guidance on
the Strategic Report’, strengthening the link between the purpose of
the Strategic Report and the Directors’ duty under Section 172 of the
Companies Act 2006, to promote the success of the Company. The
requirement under the Companies Act 2006 is that the Strategic Report
must inform members of the Company, and help them assess, how the
Directors have performed their duty under Section 172 to promote the
success of the Company. The revised guidance encourages companies
to consider the broader matters that may impact upon the performance
of the Company over the longer term including the interests of wider
stakeholders, and it is now established Mitchells & Butlers practice
that strategic proposals put to the Company’s Board meetings include
a requirement to consider the Directors’ duties under Section 172.
A detailed explanation of the manner in which the Board has discharged
its responsibilities under Section 172 is set out in the Compliance
Statements on pages 54 and 55.
The specific provisions of Section 172 require Directors to act in the way
they consider, in good faith, would be most likely to promote the success
of the Company for the benefit of its members as a whole and, in doing
so, have regard to the interests of other stakeholders. The specific
requirements of Section 172 are that Boards should consider:
• the likely consequences of decisions in the long term;
• the interests of the Company’s employees;
• the fostering of business relationships with suppliers, customers
and others;
• the impact of the Company’s operations on the community and
the environment;
• the desirability of the Company maintaining a reputation for high
standards of business conduct; and
• the need to act fairly as between members of the Company.
The 2018 Code specifically requires that the Board should understand
the views of the Company’s key stakeholders (including employees,
suppliers, customers and others) and keep stakeholder engagement
mechanisms under review so they remain effective. The 2018 Code also
recommends that there should be regular reporting as to how the Board
has complied with this engagement approach in its decision-making
processes and how the interests of different shareholders have been
considered. The 2018 Code sets out a series of aspects to be taken into
account in demonstrating the Board has complied with its Section 172
responsibilities. These are listed below, together with Company
procedures which align Mitchells & Butlers’ corporate behaviour with
the spirit and values of the 2018 Code and how the Board has employed
its oversight of the Company’s purpose. This purpose is set out in more
detail in the Strategic Report.
a. Culture
Mitchells & Butlers has in place a set of PRIDE values of Passion, Respect,
Innovation, Drive and Engagement which underpin its key priorities of
People, Practices, Profits and Guests. The Board observes these PRIDE
values in discharging its everyday responsibilities and considering
decisions and proposals and encourages all levels of the organisation
to do so.
b. Strategy
In demonstrating that the Board is promoting the success of the Company
and taking decisions with regard to their long-term impact, the Board
must ensure it has in place, and regularly reviews, its agreed strategy.
Developments arising from the strategy review are followed up,
documented and, on a regular basis, the Board reviews whether the
Company is operating in line with that strategy and/or there needs to be
a revision of the strategy to reflect external, and possibly internal, changes
in the dynamics of the business. Board papers refer to whether they
reflect a proposal that is aligned to, or diverges from, the agreed strategy.
Principle B and Provisions 1 and 2 of the 2018 Code require the Board to:
• describe how opportunities and risks to the future success of the
business have been considered and addressed, the sustainability of
the Company’s business model and how its governance contributes
to the delivery of its strategy;
• establish the Company’s purpose, values and strategy, ensure that
these and its culture are aligned and describe the activities the Board
takes to monitor and implement this culture; and
• describe the Company’s approach to investing in and rewarding
its workforce.
Details of how the Board achieves these are given in the Strategic Report
on pages 18 to 58.
c. Training and awareness
There is an induction process for all Directors on appointment and
the Group General Counsel and Company Secretary is available to
all Directors, whether of the Company or any of the subsidiaries, for
consultation and guidance on matters of governance in relation to any
aspects of the affairs of any part of the Group. As circumstances or new
areas develop, whether in the operations of the business or externally,
appropriate training will be considered to ensure that each Director
is involved in decision-making and oversight with the benefit of the
correct amount of knowledge as to what is relevant for consideration.
The induction process ensures that Directors are aware of, and
understand, the requirements under Section 172. Nevertheless,
all subsidiary Directors have received a comprehensive guide to provide
training below Board level in relation to Section 172 requirements,
focusing on how such considerations should be documented in the
future, to ensure a proper understanding of what needs to be considered
and what evidence is required to be presented when putting proposals
to the Board.
Ongoing training and guidance on their responsibilities continues to be
provided to subsidiary company Directors.
d. Information
Board paper procedures now contain specific references to the factors
referred to in Section 172 of the Companies Act 2006, so they can be
brought to the Board’s attention where appropriate.
e. Policies and processes
The business has an existing comprehensive suite of policies and
processes across a wide spectrum of its operations and practices
and these are updated, revised and re-communicated regularly.
f. Stakeholder engagement
Engagement with the workforce is addressed above and engagement
with guests is dealt with through the Guest Health initiatives and this
is explained in our Value Creation story on pages 30 to 33. Engagement
with key, critical suppliers is addressed through the supplier segmentation
tiering process where we consult with suppliers on a regular basis. This
varies from monthly interaction to annual reviews, depending on where
the supplier appears on the Company’s tier 1 to tier 4 ranking (which is
a multi-factor process involving criticality, volume, spend size and
availability of substitute products).
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 77
Governance
3. Board composition and diversity
a. Board composition
The Board is currently comprised of nine members whose biographies are outlined on pages 64 and 65. These are the Chair, Chief Executive and
Chief Financial Officer, three independent Non-Executive Directors and three Non-Executive Directors. Two independent Non-Executive Directors,
representing 22% of the Board’s Directors, are female, one of whom (Jane Moriarty) is also the Senior Independent Director. The Chair, Bob Ivell,
has served on the Board since May 2011. None of the Directors are from a minority ethnic background (as defined in the UK Listing Rules).
The shareholder representative Non-Executive Directors are nominated by Piedmont and Elpida, who, together with Smoothfield, are subsidiaries
of Odyzean, the Company’s largest shareholder, which holds approximately 57% of the Company’s issued share capital. Further information relating
to the Odyzean Group and the specific nomination rights held by Piedmont and Elpida is set out on page 67.
The Board acknowledges that the Chair’s period of tenure on the Board does not meet the best practice recommendations of the UK Corporate
Governance Code and the level of Board diversity does not meet the targets set out in the UK Listing Rules and, whilst this overall composition of the
Board remains a matter for continuous review, it should be noted that in the prospectus published by the Company on 22 February 2021 in connection
with the Open Offer, the Company confirmed that the Odyzean Group had indicated that it: (a) would disregard specific corporate governance
requirements around tenure; (b) intended to review the composition of the Board, which may result in less focus on compliance with UK Corporate
Governance Code recommendations in the future; and (c) the time and cost devoted by the senior management team to public company matters
should be reduced. The Company has received no indication of a change in approach on these issues from the Odyzean Group.
The composition of the Board and executive management is set out in the following tables as required by UKLR 22.2.30R(2). The underlying
information was collected directly from the relevant individuals. Executive management is classed as the Executive Committee, which includes
two Board members.
Gender identity and sex
Number of Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
Men 78 3 7 70
Women 22 1 3 30
Ethnic background
Number of Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (including minority-white groups) 100 4 10 100
Mixed/multiple ethnic groups – – – –
Asian/Asian British – – – –
Black/African/Caribbean/Black British – – – –
Other ethnic group – – – –
Not specified/prefer not to say – – – –
b. Board diversity
Principle J of the 2018 Code states that boards are encouraged to ‘promote diversity of gender, social and ethnic backgrounds, cognitive and personal
strengths’ through their appointments and succession planning. The purpose is to ensure that there is a balance of views from different genders and
other experiences and skill sets around the board table so that decision-making can be made with good oversight of all relevant factors.
Dave Coplin has been identified by the Board as the Director responsible for oversight of the Company’s diversity and inclusion arrangements. The
Company has had a Board Diversity Policy in place for some time, but during FY 2019 it was also agreed that talent pipeline presentations to the Board
should include the extent to which diversity aspects have been taken into account in development plans/recruitment, and that ethnicity and disability
reporting should be addressed, to the extent that the Company has reliable data. Talent pipeline presentations were put on hold during Covid-19
restrictions, but resumed in FY 2021 and continued in FY 2022, FY 2023 and FY 2024.
Gender Pay Gap data is already overseen by the Remuneration Committee and details are set out on page 108 of the Report on Directors’ remuneration.
Corporate governance statement continued
78 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
4. Proportionate executive remuneration
This is dealt with on page 108 of the Report on Directors’ remuneration.
Corporate governance
The Board is committed to high standards of corporate governance.
The Board considers that the Company has complied throughout the
year ended 28 September 2024 with all the Provisions and best practice
guidance of the 2018 Code except certain specific aspects related to
Chair’s tenure, Board composition, the constitution of a Board Committee,
effectiveness reviews and executive pension contributions. This Corporate
Governance Statement addresses the areas where, for reasons specific
to Mitchells & Butlers, there are divergences from the 2018 Code as
described below.
The Audit Committee report and Nomination Committee report, which
are set out on pages 88 to 91 and page 83 respectively of the Annual
Report, also form part of this Corporate Governance Statement and
they should all be considered together.
The Board recognises the importance of good corporate governance
in creating a sustainable, successful and profitable business and details
are set out in this statement of the Company’s corporate governance
procedures and application of the principles of the 2018 Code. There
are, however, a small number of areas where, for reasons specifically
related to the Company, the detailed Provisions of the 2018 Code were
not fully complied with in FY 2024. These areas are kept under regular
review. A fundamental aspect of the 2018 Code is that it contains best
practice recommendations in relation to corporate governance yet
acknowledges that, in individual cases, these will not all necessarily
be appropriate for particular companies. Accordingly, the 2018 Code
specifically recognises the concept of ‘comply or explain’ in relation
to divergences from it.
Compliance with the Code
Except for the matters which are explained below (in line with the
‘comply or explain’ concept), the Company complied fully with the
Principles and Provisions of the 2018 Code throughout the financial
period in respect of which this statement is prepared (and continues
to do so as at the date of this statement).
Explanation for non-compliance with parts of the Code
The current Board consists of the two Executive Directors and the Chair,
the three Independent Non-Executive Directors and three representative
directors of the Odyzean Group which holds approximately 57% of the
issued share capital. The Board does not currently intend to change this
arrangement and believes that, despite not strictly complying with the
2018 Code, the current structure strengthens corporate governance
as it is both representative of the Company’s shareholder base and
demonstrates the Odyzean Group’s ongoing commitment and support
to the overall strategy and management of the Company.
The assessment of the composition of the Board and its Committees
and the Chair’s tenure should be considered in the context of the
explanation already set out under the heading of ‘Board composition
and diversity’ on page 78.
During the year, there were five separate areas of divergence from full
compliance with the 2018 Code, as set out below by reference to specific
paragraphs in the 2018 Code.
1. Chair’s tenure (Provision 19)
Provision 19 of the 2018 Code states:
“The chair should not remain in post beyond nine years from the date
of their first appointment to the board. To facilitate effective succession
planning and the development of a diverse board, this period can be
extended for a limited time, particularly in those cases where the chair
was an existing non-executive director on appointment. A clear
explanation should be provided.”
Bob Ivell was appointed to the Board in May 2011 and, as such, his
appointment extended beyond the normal nine year tenure, which
expired in May 2020. The Board had already reviewed this in advance
in 2019 and concluded that it was appropriate that he should remain
in place as Chair.
Mr Ivell’s extensive industry experience and his involvement with such
influential bodies as UK Hospitality, have been of great assistance to
the Company in addressing the ongoing challenges of energy prices,
inflationary cost pressures, the demanding trading environment and
dampened consumer confidence. The requirement for a stable and
experienced Board in such circumstances, and it being an inappropriate
time for the Board to be considering changes in the existing arrangements,
meant that no further consideration was given in FY 2024 to Provision 19
of the 2018 Code, in relation to Bob Ivell’s Chair tenure. This will remain
the case while the Company continues to deal with the rebuilding
of its business.
2. Composition of the Board (Provision 11)
Throughout the year, Provision 11 of the 2018 Code, which requires that
at least half the board, excluding the chair, should be non-executive
directors whom the board considers to be independent, was not complied
with. Accordingly, this had consequential implications on the composition
of the Remuneration Committee.
The Board does not comply fully with the requirement for at least half of
its members to be independent, due to the presence of three shareholder
representatives on the Board, representing members of the Odyzean
Group. These shareholders maintain a dialogue via their representatives
on the Board, all of whom are careful to ensure that there is no conflict
between that role and their duty to the Board and other shareholders.
The members of the Odyzean Group made extremely significant
investments in the Company and currently hold approximately 57%
of the Company’s issued share capital. The Board considers their
investment objectives to be fully aligned with those of the Group and
of other shareholders. The Board maintains excellent relations with its
major shareholders and considers their commitment to be a significant
factor in the ongoing stability of the Board, particularly as a result of their
strong support of the Board’s long-term strategy, including the recent
Ignite initiatives. Their continued investment and presence on the Board
adds value as the Group works towards common goals, and in pursuit
of the Company’s published strategy. In particular, the members of the
Odyzean Group have been very supportive of the Board’s actions when
the Company had to deal with the forced closure of the business during
the Covid-19 pandemic, followed by the need for an Open Offer in FY
2021, which they subscribed for in full. Their respective representatives
continued to offer valuable advice and experience while the Board
considered options in the face of such unprecedented circumstances.
The Board intends to continue to work closely with the representatives
of its major shareholders to further the interests of the Company. The
Company is not aware of any changes being proposed to the shareholder
representative profile of the Board in the immediate future.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 79
Governance
3. Constitution of Committees
Throughout FY 2024, the Company had (and continues to have) fully
functioning Nomination, Audit and Remuneration Committees as
required by the 2018 Code.
Remuneration Committee (Code Provision 32)
The Remuneration Committee is not fully compliant with the relevant
Provisions of the 2018 Code. Provision 32 of the 2018 Code specifies
that the Remuneration Committee should consist of independent
Non-Executive Directors and the Remuneration Committee included the
presence of a representative of a major shareholder who is a member of
the Odyzean Group. As set out on page 67, under the terms of the Deed
of Appointment between the Company and Piedmont, Piedmont is
entitled to have a Director attend, and receive all the papers relating to,
meetings of the Remuneration Committee. The Board has, in the
circumstances, agreed that Mr Levy should be a member of the
Committee. The Board has carefully considered the implications of this
arrangement and has concluded that it constitutes a valid exception
under the ‘comply or explain’ regime of the 2018 Code, in that the
shareholder concerned is committed to the progression and growth of
the Company, has made a substantial financial commitment and is fully
supportive of the Group’s strategy. All the shareholder representatives
have significant commercial and financial experience and make a
substantial contribution to the Committees and the Group remains fully
committed to working with them on matters affecting the Group and its
activities in the future.
4. Effectiveness Reviews (Provision 21)
As reported on page 63, the Chair has kept the skills, contributions and
experience of the Board members under close review throughout FY 2024.
Provision 21 requires that there should be a formal and rigorous annual
evaluation of the performance of the Board, its committees, the Chair
and individual Directors; that the Chair should consider having a regular
externally facilitated board evaluation; that in FTSE 350 companies this
should happen at least every three years; and that the external evaluator
should be identified in the annual report and a statement made about
any other connection it has with the company or individual directors.
None of these evaluations took place in FY 2024 and the Board will
consider if it is appropriate to carry out any such evaluations, in FY 2025.
The information required by Disclosure Guidance and Transparency
Rule (‘DTR’) 7.1 is set out in the Audit Committee report on pages 88 to
91. The information required by DTR 7.2 is set out in this Corporate
Governance Statement, other than that required under DTR 7.2.6 which
is set out in the Directors’ report on pages 66 to 73.
5. Executive pension contributions (Code provision 38)
During part of FY 2024, the Company was not fully compliant with
Provision 38 of the 2018 Code which sets out that pension contribution
rates for executive directors should be aligned with those available to the
wider workforce. In 2020 the Company put in place a phased strategy to
address this non-compliance, pursuant to which any increase in the base
pay of Executive Directors would be entirely offset by an equivalent
reduction in their cash equivalent pension contributions until such
pension contributions were aligned with the wider workforce. Full
compliance with Provision 38 was achieved during FY 2024, at which
time the pension allowance paid to all Executive Directors reduced to 4%,
in line with the wider workforce. This is consistent with the approach the
Company previously communicated in its remuneration policy. This will
no longer be an area of non-compliance in FY 2025.
Board composition
The Board started the year with nine Directors and the table on page 81
lists the composition of the Board during the year. There were no changes
to the Board during FY 2024. No further significant changes to the
leadership and oversight of the Group by its Board and its Committees
are currently being considered.
The Board
The Board is responsible to all stakeholders, including its shareholders,
for the strategic direction, development and control of the Group.
It approves strategic plans and annual capital and revenue budgets.
It reviews significant investment proposals and the performance of past
investments and maintains oversight, supervision and control of the
Group’s operating and financial performance. It monitors the Group’s
overall system of internal controls, governance and compliance and
ensures that the necessary financial, technical and human resources are
in place for the Company to meet its objectives. Our website includes
a schedule of matters which have been reserved for the main Board.
During FY 2024 there were eight Board meetings. There were also four
meetings of the Audit Committee, four meetings of the Remuneration
Committee and the Nomination Committee did not meet. The table in
the Governance at a Glance section on page 60 shows attendance levels
at the Board and Committee meetings held during the year; the numbers
in brackets confirm how many meetings each Director was eligible to
attend during the year.
Full attendance was recorded for all Directors in respect of all Board
and Committee meetings held during FY 2024, but where Directors
are unable to attend a meeting (whether of the Board or one of its
Committees), they are provided with all the papers and information
relating to that meeting and are able to discuss issues arising directly
with the Chair of the Board or Chair of the relevant Committee. There
are eight Board meetings currently planned for FY 2025.
The Company Secretary’s responsibilities include ensuring good
information flows to the Board and between senior management and the
Non-Executive Directors. The Company Secretary is responsible, through
the Chair, for advising the Board on all corporate governance matters
and for assisting the Directors with their professional development.
This includes regular corporate governance and business issues updates,
as well as the use of operational site visits and the provision of external
courses where required. The Company Secretary facilitates a
comprehensive induction for newly appointed Directors, tailored to
individual requirements and including guidance on the requirements of,
and Directors’ duties in connection with, the 2018 Code and the
Companies Act 2006 as well as other relevant legislation.
The appointment and removal of the Company Secretary is a matter
reserved for the Board.
Corporate governance statement continued
80 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Directors
The following were Directors of the Company during the year ended 28 September 2024:
Directors who served during the year Date appointed
Date of change of
role
Bob Ivell Independent Non-Executive Director
a
09/05/11 14/07/11
Interim Chair
a
14/07/11 26/10/11
Executive Chair 26/10/11 12/11/12
Non-Executive Chair 12/11/12 –
Amanda Brown Independent Non-Executive Director 04/07/22 –
Keith Browne
b
Non-Executive Director 22/09/16 –
Dave Coplin Independent Non-Executive Director 29/02/16 –
Eddie Irwin
b
Non-Executive Director 21/03/12 –
Tim Jones Chief Financial Officer 18/10/10 –
Josh Levy
c
Non-Executive Director 13/11/15 –
Jane Moriarty Independent Non-Executive Director 27/02/19 25/01/22
Senior Independent Director 25/01/22 –
Phil Urban Chief Executive 27/09/15 –
a. Independent while in the role specified.
b. Nominated shareholder representative of Elpida.
c. Nominated shareholder representative of Piedmont.
At the start of the year, the Board was made up of seven male and
two female Directors and there were no changes during the year,
meaning that at the year end, the Board consisted of seven male and
two female Directors.
The Executive Directors have service contracts. The Chair and each of
the Non-Executive Directors have letters of appointment. Copies of the
respective service contracts or letters of appointment of all the members
of the Board are available on the Company’s website. In addition, they
are available for inspection at the registered office of the Company during
normal business hours and at the place of the Annual General Meeting
from at least 15 minutes before, and until the end of, the meeting.
At the Company’s forthcoming Annual General Meeting in 2025 all the
Directors will be required to stand for annual re-election, in accordance
with the Company’s Articles of Association. Their biographical details as
at 26 November 2024 are set out on pages 64 and 65, including their main
commitments outside the Company. In addition, Provision 18 of the 2018
Code requires that the papers accompanying the resolutions to elect or
re-elect directors, set out the specific reasons why the individual director’s
contribution is, and continues to be, important to the Company’s
long-term sustainable success and this information is included in
the Notice of Meeting.
Provision 15 of the 2018 Code states that full-time executive directors
should not take on more than one non-executive directorship in a FTSE
100 company or other significant appointments. The Mitchells & Butlers
policy is that Executive Directors may be permitted to accept one
external Non-Executive Director appointment with the Board’s prior
approval and as long as this is not likely to lead to conflicts of interest.
During FY 2024, neither of the Executive Directors held any such external
directorship, nor did they hold any other significant appointments, as
a director or otherwise, and that remains the case as at the date of this
Annual Report.
Division of responsibilities between Chair
and Chief Executive
In accordance with Provision 9 of the 2018 Code, the roles of Chair
and Chief Executive should not be exercised by the same individual.
The division of responsibilities between the Chair and the Chief Executive
is clearly established as required by Principle G of the 2018 Code and
these are set out in writing and have been agreed by the Board. In
particular, it has been agreed in writing that the Chair shall be responsible
for running the Board and shall provide advice and assistance to the Chief
Executive. He also chairs the Nomination Committee, is a member of the
Remuneration Committee and attends, by invitation, meetings of the
Audit Committee. He also chairs the Market Disclosure Committee,
Corporate Responsibility Committee, the Property Committee and
the Pensions Committee.
It is also agreed in writing that the Chief Executive has responsibility for
all aspects of the Group’s overall commercial, operational and strategic
development. He chairs the Executive Committee (details of which
appear on page 84) and attends the Nomination, Remuneration and
Audit Committees by invitation, not necessarily for the entirety of such
meetings depending upon the subject matter. He is also a member of
the Market Disclosure Committee, the Property Committee and the
Pensions Committee.
The segregation of responsibilities between the Chair and the Chief
Executive is set out in the Company’s Corporate Governance Compliance
Statement, which is available on our website, www.mbplc.com.
All other Executive Directors (currently just the Chief Financial Officer)
and all other members of the Executive Committee report to the
Chief Executive.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 81
Governance
Chair
Provision 9 of the 2018 Code provides that the Chair should, on
appointment, meet the independence criteria set out in Provision 10
of the 2018 Code. Bob Ivell met these independence criteria
on appointment.
Bob Ivell was appointed to the role of Executive Chair on 26 October
2011 on the departure of the then Chief Executive and reverted to the
role of Non-Executive Chair on 12 November 2012.
The Chair ensures that appropriate communication is maintained with
shareholders. He ensures that all Directors are fully informed of matters
relevant to their roles. An explanation of the Board’s view on the Chair’s
tenure is set out on page 79.
With effect from 1 January 2025, the Chair’s fee will remain unchanged.
Chief Executive
Phil Urban was appointed Chief Executive on 27 September 2015. He has
responsibility for implementing the strategy agreed by the Board and for
the executive management of the Group.
Senior Independent Director
Jane Moriarty was appointed Senior Independent Director on
25 January 2022.
The Senior Independent Director supports the Chair in the delivery of the
Board’s objectives and ensures that the views of all major shareholders
and stakeholders are conveyed to the Board. Jane Moriarty is available
to all shareholders should they have any concerns if the normal channels
of Chair, Chief Executive or Chief Financial Officer have failed to resolve
them, or for which such contact is inappropriate.
All Directors have the ability to raise any relevant views which they have
with the Senior Independent Director if they feel this is needed.
Non-Executive Directors
The Company has experienced Non-Executive Directors on its Board.
Josh Levy was appointed to the Board as a representative of one of the
Company’s largest shareholders, Piedmont, a member of the Odyzean
Group, and was therefore not regarded as independent in accordance
with the 2018 Code.
Eddie Irwin and Keith Browne were appointed to the Board as
representatives of another of the Company’s largest shareholders,
Elpida, which is also a member of the Odyzean Group, and were therefore
not regarded as independent in accordance with the 2018 Code.
There are currently three independent Non-Executive Directors on the
Board: Dave Coplin, Jane Moriarty and Amanda Brown.
Other than their fees, and reimbursement of taxable expenses which
are disclosed on page 109, the Non-Executive Directors received no
remuneration from the Company during the year.
There will be no increase in the fees of the Non-Executive Directors in
January 2025. This applies to the base fee, the fee paid to Non-Executive
Directors for chairing a Committee, the role of Senior Independent
Director, and the fee paid to Dave Coplin for his role as the Board
representative for ‘employee voice’.
When Non-Executive Directors are considered for appointment,
the Board takes into account their other responsibilities in assessing
whether they can commit sufficient time to their prospective directorship.
On average, the Non-Executive Directors spend two to three days per
month on Company business, but this may be more depending on the
circumstances from time to time.
Board information and training
All Directors are briefed by the use of comprehensive papers circulated
in advance of Board meetings and by presentations at those meetings, in
addition to receiving minutes of previous meetings. Their understanding
of the Group’s business is enhanced by business specific presentations
and operational visits to the Group’s businesses. Separate strategy
meetings and meetings with senior executives and representatives
of specific functions, brands or business units are also held throughout
the year.
The training needs of Directors are formally considered on an annual
basis and are also monitored throughout the year with appropriate
training being provided as required, including corporate social
responsibility and corporate governance as well as the environmental
impacts of the Company’s activities.
Independent advice
Members of the Board may take independent professional advice in the
furtherance of their duties and the Board has agreed a formal process for
such advice to be made available.
Members of the Board also have access to the advice and services of the
Group General Counsel and Company Secretary, the Company’s legal
and other professional advisers and its external auditor.
The terms of engagement of the Company’s external advisers and its
external auditor are regularly reviewed by the Group General Counsel
and Company Secretary.
Committees
The Audit, Remuneration, Nomination and Corporate Responsibility
Committees have written terms of reference approved by the Board,
which are available on the Company’s website www.mbplc.com. Those
terms of reference are each reviewed annually by the relevant Committee
to ensure they remain appropriate.
Audit Committee
Details of the Audit Committee and its activities during the year are
included in the Audit Committee report on pages 88 to 91 which is
incorporated by reference into this statement.
Remuneration Committee
Details of the Remuneration Committee and its activities during the year
are included in the Report on Directors’ remuneration on pages 92 to 112.
Corporate governance statement continued
82 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Nomination Committee
The Nomination Committee is responsible for nominating, for the
approval of the Board, candidates for appointment to the Board. It is also
responsible for succession planning for the Board and the Executive
Committee and reviewing the output of the Board effectiveness review.
In compliance with the disclosure requirements of Provision 23 of the
2018 Code, there is an ongoing process of review of the make-up of the
Board and for Board succession, which is carried out by the Nomination
Committee and led by the Chair. The Nomination Committee engages
external search agencies when required and ensures that all candidates
are identified and assessed against pre-determined criteria. Gender
balance is dealt with by the Nomination Committee on a regular basis
and includes assessment of gender balance at senior management level.
The following were members of the Nomination Committee during
the year:
Appointment
date
Member at
28/09/24
Bob Ivell (Chair) 11/07/13 Yes
Amanda Brown 04/07/22 Yes
Dave Coplin 29/02/16 Yes
Eddie Irwin 11/07/13 Yes
Jane Moriarty 27/02/19 Yes
In accordance with the disclosure requirement in Provision 23 of the
2018 Code, as at the date of this report, the gender balance for those in
the senior management team and their direct reports was split as to 44%
female and 56% male. For this purpose, the senior management team
comprises the Executive Committee.
The gender balance of the Executive Committee (which includes two
Board members) is 70% male and 30% female. Further information on the
Executive Committee is given on page 84.
The Nomination Committee agrees the importance of having diversity on
the Board, including female representation and individuals with different
experiences, skill sets and expertise, so as to maintain an appropriate
balance within the Company and on the Board. There were no meetings
of the Nomination Committee in FY 2024. When appointments are
made, its members are consulted about and support the approach
to diversity across the Board.
Diversity and Inclusion Steering Group
and Board Diversity Policy
The Company has a Diversity and Inclusion Steering Group which
examines the implementation of diversity within the Group. As referred
to on page 78, Dave Coplin has been identified by the Board as the
Director with responsibility for oversight of the Company’s Diversity
and Inclusion arrangements.
The Board has approved a Board Diversity Policy, which was reviewed
and approved in October 2022. The key statement and objectives of that
policy are as follows:
Statement:
The Board recognises the benefits of diversity. Diversity of skills,
background, knowledge, international and industry experience, and
gender, amongst many other factors, will be taken into consideration
when seeking to appoint a new Director to the Board. Notwithstanding
the foregoing, all Board appointments will always be made on merit.
Objectives:
• The Board should ensure an appropriate mix of skills and experience
to ensure an optimum Board and efficient stewardship. All Board
appointments will be made on merit while taking into account
individual competence, skills and expertise measured against
identified objective criteria (including consideration of diversity).
• The Board should ensure that it comprises Directors who are
sufficiently experienced and independent of character and judgement.
• The Nomination Committee will continue to review what steps and
recruitment processes are appropriate for achieving diversity on the
Board with due regard being given to the recommendations set out
in the Davies Report, the Hampton-Alexander Review and the 2018
Code. These will be reviewed on an annual basis.
Progress against the policy:
The Board continues to monitor progress against this policy. In terms
of Board diversity, at the start and end of FY 2024 there were nine Board
Directors, of which two were female (22%). Any future appointments will
always be made on merit and will continue to take into account diversity,
not only in terms of gender, but also in terms of the appropriate mix of
skills and experience. The assessment of the composition of the Board
and its Committees and the Chair’s tenure should be considered in the
context of the explanation already set out under the heading of ‘Board
composition and diversity’ on page 78.
The Company has an Equality, Diversity & Inclusion Policy (last updated
in September 2024), which applies in relation to employees of the
Mitchells & Butlers Group, and which can be found in the Value Creation
story on page 31. The aim of the policy is to promote equal opportunities
in employment regardless of age, disability, gender reassignment,
marital or civil partner status, pregnancy or maternity, race (including
colour, nationality, ethnic or national origin), religion or belief, sex,
or sexual orientation.
A detailed description of the duties of the Nomination Committee is set
out within its terms of reference which can be viewed at www.mbplc.
com/investors/business-conduct/board-committees/
Market Disclosure Committee
The EU Market Abuse Regulation (‘MAR’) which took effect in July 2016,
brought about substantial changes relating to announcements of material
information about the Company and its affairs, and relating to dealings
in shares or other securities by Directors and other senior managers,
including tighter controls on permitted ‘dealings’ during closed periods
and the handling of information relating to the Company. MAR requires
companies to keep a list of people affected and the previous compliance
regime and timeframe were enhanced.
As a result, a formal standing Committee of the Board was established,
the Market Disclosure Committee, which comprises the Chair, the Chief
Executive, the Chief Financial Officer and an independent Non-
Executive Director.
Corporate Responsibility Committee
A Corporate Responsibility Committee was established in June 2019
and its purpose is to allow more executive, leadership and functional
management involvement in matters of corporate responsibility and
sustainability. Its Terms of Reference are on the Company’s website
www.mbplc.com.
The Corporate Responsibility Committee comprises Bob Ivell (Chair),
Eddie Irwin, Jane Moriarty, Dave Coplin and Amanda Brown. The Chief
Executive, Phil Urban, is invited to attend regularly.
A multi-disciplinary operational and functional steering committee has
been identified and tasked with carrying out first level oversight of the
work plan and roadmap approved by the Committee in FY 2021.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 83
Governance
Property Committee
The Property Committee reviews property transactions which have
been reviewed and recommended by the Portfolio Development
Committee, without the need for submission of transactions to the full
Board. The Property Committee agrees to the overall strategic direction
for the management of the Group’s property portfolio on a regular basis
and may decide that a particular transaction should be referred to the
Board for consideration or approval. The Property Committee comprises
Bob Ivell (Committee Chair), Phil Urban, Tim Jones, Josh Levy,
Keith Browne, Jane Moriarty, Amanda Brown and Gary John.
Pensions Committee
The Board has established a Pensions Committee to supervise and
manage the Company’s relationship with its various pension schemes
and their trustees.
The Pensions Committee members are Bob Ivell (Committee Chair),
Tim Jones, Phil Urban, Keith Browne and Josh Levy.
Throughout FY 2024 the work of the Pensions Committee focused on
preparations for the buyout and wind up of the Executive Plan, which
is due to complete in late 2024. The Committee also monitored the
performance of the Mitchells & Butlers Pension Plan which moved to
a full buy-in with Standard Life during FY 2023. The current position on
both plans has substantially eliminated all remaining pensions risk in the
Group and pension deficit contributions in respect of both plans have
now ceased.
Executive Committee
The Executive Committee, which is chaired by the Chief Executive,
consists of the Executive Directors and certain other senior executives,
namely Gary John (Group Property Director), Susan Martindale (Group
HR Director), Andrew Freeman (Group General Counsel and Company
Secretary), Chris Hopkins (Commercial and Marketing Director) and
David Briggs, Susan Chappell, David Gallacher and Anna-Marie Mason
(the Divisional Directors). Gary John has made the decision to retire
in early 2025 and Nick Pinney will take on the role of Group Property
Director as of 17 February 2025.
The Executive Committee ordinarily meets, on average, 12 times per year
and has day-to-day responsibility for the running of the Group’s business.
It develops the Group’s strategy and annual revenue and capital budgets
for Board approval. It reviews and recommends to the Board any
significant investment proposals. This Committee monitors the financial
and operational performance of the Group and allocates resources
within the budgets agreed by the Board. It considers employment issues,
ensures the Group has an appropriate pool of talent and develops senior
management workforce planning and succession plans.
A note of the actions agreed by, and the principal decisions of, the
Executive Committee, is supplied to the Board for information in order
that Board members can keep abreast of operational developments.
General Purposes Committee
The General Purposes Committee comprises any two Executive
Directors or any one Executive Director together with a senior officer
from an agreed and restricted list of senior executives. It is always
chaired by an Executive Director. It attends to business of a routine
nature and to administrative matters, the principles of which have been
agreed previously by the Board or an appropriate Committee.
Portfolio Development Committee
The executive review of property transactions and capital allocation to
significant property matters such as site remodel and conversion plans
and the Company’s real estate strategy is carried out by the Portfolio
Development Committee. This is not a formal Board Committee but
comprises the Chief Executive, the Chief Financial Officer, the Group
Property Director, and the Group General Counsel and Company
Secretary. It has delegated authority to approve certain transactions
up to agreed financial limits and, above those authority levels, it makes
recommendations to the Board or the Property Committee.
Treasury Committee
The treasury operations of the Mitchells & Butlers Group are operated
on a centralised basis under the control of the Group Treasury
department. Although not a formal Board Committee, the Treasury
Committee, which reports to the Chief Financial Officer but is subject
to oversight from the Audit Committee and, ultimately, the Board,
has day-to-day responsibility for:
• liquidity management;
• investment of surplus cash;
• funding, cash and banking arrangements;
• interest rate and currency risk management;
• guarantees, bonds, indemnities and any financial encumbrances
including charges on assets; and
• relationships with banks and other market counterparties such
as credit rating agencies.
The Treasury Committee also works closely with the Finance
Department to review the impact of changes in relevant accounting
practices and to ensure that treasury activities are disclosed
appropriately in the Company’s accounts.
The Board delegates the monitoring of treasury activity and compliance to
the Treasury Committee. It is responsible for monitoring the effectiveness
of treasury policies and making proposals for any changes to policies or in
respect of the utilisation of new instruments. The approval of the Board,
or a designated committee thereof, is required for any such proposals.
Code of ethics
The Company has implemented business conduct guidelines describing
the standards of behaviour expected from those working for the Company
in the form of a code of ethics (the ‘Ethics Code’). The Ethics Code was
re-communicated to all employees in FY 2024 to ensure it was kept
clearly in focus. Its aim is to promote honest and ethical conduct
throughout our business. The Ethics Code requires:
• compliance with all applicable rules and regulations that apply to the
Company and its officers including compliance with the requirements
of the Bribery Act 2010;
• the ethical handling of actual or apparent conflicts of interest
between internal and external, personal and professional
relationships; and
• that any hospitality from suppliers must be approved in advance
by appropriate senior management, with a presumption against
its acceptance.
Corporate governance statement continued
84 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
The Company takes a zero tolerance approach to bribery and has
developed an extensive Bribery Policy which is included in the Ethics Code.
The Ethics Code requires employees to comply with the Bribery Policy.
The Company also offers an independently-administered, confidential
whistleblowing hotline for any employee wishing to report any concern
that they feel would be inappropriate to raise with their line manager.
All whistleblowing allegations are reported to, and considered by, the
Executive Committee and a summary report (with details of any major
concerns) is supplied to, and considered by, the Audit Committee
at each of its meetings.
Principle E and Provision 6 of the 2018 Code require the Board to be
clear how its approach to whistleblowing has changed from an Audit
Committee-led approach to a Board-led approach. Although the Audit
Committee continues to receive regular reports on whistleblowing
activity, each set of full Board papers also includes, as part of the report
from the Group Risk Director, the number and assessment of any
whistleblowing reports received and, where relevant, the actions taken
in respect of reports which are, on investigation, found to be credible.
The Board takes regular account of social, environmental and ethical
matters concerning the Company through regular reports to the Board
and presentations to the Board at its strategy meetings.
Directors’ training includes environmental, social and governance
(‘ESG’) matters and the Company Secretary is responsible for ensuring
that Directors are made aware of and receive regular training in respect
of these important areas. The Chief Executive, Phil Urban, is ultimately
responsible for ESG matters, which includes climate change reporting,
which is dealt with in the next section.
Climate change reporting
1. Reporting
Current mandatory reporting and disclosure requirements
The Task Force on Climate-related Financial Disclosures (‘TCFD’) was
established by the Financial Stability Board in 2015 and published its final
report in June 2017. The report sets out 11 recommended disclosures
under four pillars to promote better disclosure and these are set out below:
TCFD: four recommendations and eleven recommended disclosures
Recommendations
Governance Strategy Risk Management Metrics and Targets
Disclose the organisation’s
governance around climate-
related risks and opportunities
(‘CRO’).
Disclose the actual and potential
impacts of CRO on the
organisation’s businesses,
strategy, and financial planning
where such information is material.
Disclose how the organisation
identifies, assesses and manages
climate-related risks.
Disclose the metrics and targets
used to assess and manage
relevant CRO where such
information is material.
Recommended Disclosures
(a) Describe the Board’s
oversight of CRO.
(a) Describe the CRO the
organisation has identified over
the short, medium and long term.
(a) Describe the organisation’s
processes for identifying and
assessing climate-related risks.
(a) Disclose the metrics used by
the organisation to assess CRO
in line with its strategy and risk
management process.
(b) Describe management’s role
in assessing and managing CRO.
(b) Describe the impact of CRO
on the organisation’s businesses,
strategy and financial planning.
(b) Describe the organisation’s
processes for managing
climate-related risks.
(b) Disclose Scope 1, Scope 2
and, if appropriate, Scope 3
greenhouse gas (‘GHG’)
emissions and the related risks.
(c) Describe the resilience of the
organisation’s strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower scenario.
(c) Describe how processes
for identifying, assessing and
managing climate-related risks
are integrated into the
organisation’s overall risk
management.
(c) Describe the targets used by
the organisation to manage CRO
and performance against targets.
For FY 2024 the Company has continued to monitor climate-related risks and opportunities, in relation to TCFD and to oversee the delivery of strategy
to manage and measure the identified risks and opportunities as described in the FY 2023 disclosure. The results of this are set out on pages 40 to 45
of the Strategic Report.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 85
Governance
UK Listing Rules
Climate-related disclosure UK Listing Rule 6.6.6R(8) is a continuing
obligation for listed commercial companies in annual reports for periods
commencing on or after 1 January 2021 and thereafter, and requires
companies to disclose:
• whether they have made disclosures consistent with the four
recommendations and 11 recommended disclosures set out in
section C of the TCFD Final Report in their annual financial report;
• where these disclosures can be found in the annual report; and
• a ‘comply or explain’ obligation to explain:
– if they have not included disclosures consistent with all of the
TCFD’s recommendations and/or recommended disclosures,
which disclosures they have not included and the reasons for
not including them; and/or
– why they have included some or all of the disclosures in a
document other than their annual report.
Where not all required TCFD disclosures have been provided, in addition
to explaining why, the annual report also needs to explain:
• the timeframe for compliance; and
• the steps the company is taking or plans to take to achieve compliance.
Institutional investor requirements
Institutional investors expect all listed companies to be reporting against
all four TCFD pillars and want those disclosures to be meaningful and will
be instructing their clients accordingly in relation to voting. They also
expect companies to include a statement in their annual report that the
directors have considered material climate-related matters when
preparing and signing-off the company’s accounts.
2. Actions taken by the Company
Executive ownership
The Board tasked Phil Urban with spearheading the Company’s
approach to tackling climate change reporting across the organisation
since he also chairs the Executive Committee so can ensure focus
at Executive Committee level.
Strategy
The Board is mindful of the business impacts relevant to the sector,
and due consideration of such is included when considering changes
made across the business in relation to climate change obligations.
Going forward, this important issue will continue to form part of the
considerations taken into account by the Board when it is evaluating
strategic decision and investment priorities. Capital expenditure
proposals submitted to the Board include appropriate details on
such aspects.
Governance
Climate change issues are discussed at Board level and the Board has
specifically requested the Corporate Responsibility Committee to focus
on ESG/sustainability matters. The Company’s required climate
response/transformation is a feature of agendas, with priority being
given to ensuring enough time is dedicated to the discussion. The
Corporate Responsibility Committee approved, and recommended to
the Board, the Group’s sustainability roadmap through which it identified
and agreed how to manage climate-related issues. These initiatives were
first addressed in FY 2022 when TCFD compliance became compulsory
for the Company and is ongoing.
Risk and scenario analysis
During FY 2022, the Company developed a rigorous climate change
scenario impact analysis. In FY 2023 we reassessed all of the climate-
related risks identified in the FY 2022 process, as well as an analysis of
any emerging risks. The established risk assessment framework was
used to assess the materiality of climate risks. Climate risk analysis is
now part of the ongoing risk management process, with identified risks
reviewed at risk committee meetings as well as the opportunity to present
any emerging risks. No additional climate risks have been added to the
register during FY 2024.
The Audit Committee is tasked with ensuring it is satisfied that the
scenarios are sufficiently challenging, diverse and relevant, and also
ensuring through this process and the Risk Committee that its risk
monitoring activity appropriately addresses climate change risks for
the Company. Further details are set out on pages 40 to 45 of the
Strategic Report.
Information, reporting and assurance
The Board considers it good practice to assess whether climate-related
management information is robust and fit for purpose. Pages 40 to 45
of the Strategic Report set out the extent to which the Group relies on
external data, and the emissions table on page 73 of the Directors’ report
relies on external expertise, which is reviewed internally, and that is
considered by the Board to be reliable and credible.
The Risk Committee considers the findings of reporting reviews such
as the FRC’s climate change thematic review and during the year we have
enhanced our climate reporting by adding quantitative analysis to our
climate-related financial risks. An independent review was conducted by
our internal auditors of the policies and processes in place to support the
analysis and monitoring of energy-related initiatives. There is currently
no external assurance to which the Company’s metrics are subjected,
but this aspect is being actively considered by the Risk Committee.
The Board is responsible for the Company’s internal risk management
system, in respect of which more details can be found in the ‘Risks and
uncertainties’ section of this report, and in the following section of
this statement.
Internal control and risk management
The Board has carried out a robust assessment of the Company’s
emerging and principal risks. The Board has completed its assessment,
and has presented a description of its principal risks, what procedures
are in place to identify emerging risks, and an explanation of how these
are being managed or mitigated, on pages 46 to 52.
The Board has overall responsibility for the Group’s system of internal
control and risk management and for reviewing its effectiveness. In order
to discharge that responsibility, the Board has established the procedures
necessary to apply the 2018 Code for the period under review and to the
date of approval of the Annual Report. Such procedures are in line with
the Financial Reporting Council’s ‘Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting’ and
are regularly reviewed by the Audit Committee.
The key features of the Group’s internal control and risk management
systems include:
• Processes, including monitoring by the Board, in respect of:
i. financial performance within a comprehensive financial planning,
accounting and reporting framework;
ii. strategic plan achievement;
iii. capital investment and asset management performance, with
detailed appraisal, authorisation and post-investment reviews; and
iv. consumer insight data and actions to assess the evolution of brands
and formats to ensure that they continue to be appealing and relevant
to the Group’s guests.
Corporate governance statement continued
86 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
• An overall governance framework including:
i. clearly defined delegations of authority and reporting lines;
ii. a comprehensive set of policies and procedures that employees
are required to follow; and
iii. the Group’s Ethics Code, in respect of which an annual confirmation
of compliance is sought from all corporate employees.
• The Risk Committee, a sub-committee of the Executive Committee,
which assists the Board, the Audit Committee and the Executive
Committee in managing the processes for identifying, evaluating,
monitoring and mitigating risks. The Risk Committee, which continues
to meet regularly, is chaired by the Group General Counsel and
Company Secretary and comprises Executive Committee members
and other members of senior management from a cross-section
of functions.
The primary responsibilities of the Risk Committee are to:
i. advise the Executive Committee on the Company’s overall risk
appetite and risk strategy, taking account of the current and
prospective operating, legal, macroeconomic and financial
environments;
ii. advise the Executive Committee on the current and emerging
risk exposures of the Company in the context of the Board’s overall
risk appetite and risk strategy;
iii. promote the management of risk throughout the organisation;
iv. review and monitor the Company’s capability and processes to
identify and manage risks;
v. consider the identified key risks faced by the Company and new
and emerging risks and consider the adequacy of mitigation plans
in respect of such risks; and
vi. where mitigation plans are regarded to be inadequate, recommend
improvement actions.
The Group’s risks identified by the processes that are managed by the
Risk Committee, are described in the ‘Risks and uncertainties’ section
on pages 46 to 52.
More details of the work of the Risk Committee are included in the Audit
Committee report on pages 88 to 91.
• Examination of business processes on a risk basis including reports
from the internal audit function, known as Group Assurance, which
reports directly to the Audit Committee.
The Group also has in place systems, including policies and procedures,
for exercising control and managing risk in respect of financial reporting
and the preparation of consolidated accounts. These systems, policies
and procedures:
i. govern the maintenance of accounting records that, in reasonable
detail, accurately and fairly reflect transactions;
ii. require reported information to be reviewed and reconciled,
with monitoring by the Audit Committee and the Board; and
iii. provide reasonable assurance that transactions are recorded as
necessary to permit the preparation of financial statements in
accordance with International Financial Reporting Standards (‘IFRS’)
or UK Generally Accepted Accounting Practice, as appropriate.
Please also refer to the Statement of Directors’ responsibilities
ivespect of the Annual Report and Accounts, on page 74.
In accordance with the 2018 Code, during the year the Audit Committee
completed its annual review of the effectiveness of the Group’s risk
management and internal control systems, including financial, operational
and compliance controls.
The system of internal control is designed to manage, rather than eliminate,
the risk of failure to achieve business objectives and, as such, it can
only provide reasonable and not absolute assurance against material
misstatement or loss. In that context, in the opinion of the Audit
Committee, the review did not indicate that the system was ineffective
or unsatisfactory. To the extent that weaknesses in internal controls were
identified, the Audit Committee reviewed the audit findings, together with
the remedial action plans that were put in place, and sought confirmation
that all actions were closed out in a timely manner. Through this process,
material audit findings were presented to the Audit Committee,
the necessary follow-up reviews were completed and the results were
reported to the Audit Committee, to ensure appropriate mitigation plans
had been actioned. Please refer to the Audit Committee report, on pages
88 to 91.
The Audit Committee is not aware of any change to this status up to the
date of approval of this Annual Report.
With regard to insurance against risk, it is not practicable to insure
against every risk to the fullest extent. The Group regularly reviews both
the type and amount of external insurance that it buys with guidance
from an external independent broker, bearing in mind the availability of
such cover, its cost and the likelihood and magnitude of the risks involved
and the mitigation which insurance might provide.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 87
Governance
Audit Committee report
“On behalf of the Board, I present the report of the Audit Committee
for the financial period ended 28 September 2024.”
Jane Moriarty
Chair of the Audit Committee
Introduction
During recent years, as the purpose and
effectiveness of external and internal audit
procedures has come under increasing public
scrutiny, the Committee has ensured it has
maintained an appropriate level of engagement
with the Chief Financial Officer and the Group
Risk Director, other key individuals and their
teams who collectively provide an appreciation
and rigorous insight into how the Group
functions and reports. The Committee is
very grateful for the insight these interactions
provide and this, in turn, significantly assists
the Committee in executing its oversight role
and ensuring confidence in reporting to the
wider Board.
Engagement with external auditors, internal auditors
and other third-party advisers
The Committee continued to engage formally, regularly and at an
appropriate level of detail with our external auditors, internal auditors
(also externally resourced) and other third-party advisers as necessary.
This has enabled the Committee to maintain an appropriate understanding
of how our auditors and advisers interact and test our comprehensive
risk functions. The Committee’s engagement during the auditing and
advisory process enables it to convey confidence in their collective
fieldwork conclusions.
The Committee also ensured that the Group provided adequate resources
to ensure that any additional non-audit services required during the year
were obtained, where necessary, and the Financial Reporting Council’s
(‘FRC’) evolving reporting requirements were adhered to.
Effectiveness of internal controls and Group assurance
and risk function
The above efforts provided the Committee with a clear and detailed
understanding of the principal financial and operational risks throughout
the period (please also refer to the Group’s risks and uncertainties,
detailed on pages 46 to 52). The Committee continued to focus on
challenging the effectiveness of internal controls, the robustness of
assurance and risk management processes and in assessing the
importance of, and acting as required upon, all reported information
received from our external and internal auditors and third-party advisers.
The Committee remains committed to maintaining an open and
constructive dialogue on relevant audit matters with all shareholders.
Therefore, should you have any comments or questions on any aspects
of this report, or indeed the wider financial statements, may I respectfully
ask you to please email myself, care of Adrian Brannan, Group Risk
Director, at company.secretariat@mbplc.com
88 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Remit and membership of the Audit Committee
The main purpose of the Audit Committee is to review and maintain
oversight of the Group’s corporate governance, particularly with respect
to financial reporting, internal control and risk management. The Audit
Committee’s responsibilities also include:
• reviewing the processes for detecting fraud, misconduct and internal
control weaknesses;
• reviewing the effectiveness of the Group Assurance function; and
• overseeing the relationship with the external and internal auditors
and other third-party advisers.
At the date of the 2024 Annual Report, the Audit Committee comprised
three independent Non-Executive Directors: Jane Moriarty (Chair of the
Audit Committee), Amanda Brown and Dave Coplin. In accordance with
2018 Code Provision 24 the Board considers that Jane Moriarty has
significant, recent and relevant financial experience. Biographies of all
of the members of the Audit Committee, including a summary of their
respective experience, appear on pages 64 and 65.
The Audit Committee met at least quarterly during FY 2024. In each
case, appropriate papers were distributed to the Committee members
and other invited attendees, including, where and to the extent
appropriate, representatives of the external audit firm, the internal
Group Assurance function and other third-party advisers.
When appropriate, the Audit Committee augments the skills and
experience of its members with advice from internal and external audit
professionals, for example, on matters such as developments in financial
reporting. Audit Committee meetings are also attended, by invitation,
by other members of the Board including the Chair of the Company,
the Chief Executive and the Chief Financial Officer, the Group General
Counsel and Company Secretary, the Group Risk Director and
representatives of the external auditor, KPMG LLP. The Audit Committee
also has the opportunity to meet privately with the external auditor
not less than twice a year, without any member of management present,
in relation to audit matters.
The remuneration of the members of the Audit Committee is set out
in the Report on Directors’ remuneration on page 109.
Summary terms of reference
A copy of the Audit Committee’s terms of reference is publicly available
within the Investor section of the Group’s website: www.mbplc.com/
pdf/audit_committee_terms.pdf
The Audit Committee’s terms of reference were approved by the
Committee and adopted by the Board in 2013. Those terms of reference
specifically provide that they will be reviewed annually. They have been
reviewed and updated as appropriate each year since and no changes
were felt to be needed when they were reviewed in September 2024.
Accordingly, in FY 2024 no material changes were made to the terms of
reference of the Audit Committee, but the work of the Audit Committee
will be kept under review with the expectation that any such matters
which come to light are included in the next annual review.
The Audit Committee is authorised by the Board to review any activity
within the business. It is authorised to seek any information it requires
from, and require the attendance at any of its meetings of, any Director,
any member of management and any employees, who are expected to
co-operate with any request made by the Audit Committee.
The Audit Committee is authorised by the Board to obtain, at the Group’s
expense, external legal or other independent professional advice and
secure the attendance of outsiders with relevant experience and
expertise, if it considers this necessary.
The Chair of the Audit Committee reports to the Board meeting
following each Committee meeting on the Committee’s work and
the Board receives a copy of the minutes of each meeting.
The role and responsibilities of the Audit Committee are to:
• review the Group’s public statements on internal control, risk
management and corporate governance compliance;
• review the Group’s processes for detecting fraud, misconduct
and control weaknesses and to consider the Group’s response
to any such occurrence;
• review management’s evaluation of any change in internal controls
over financial reporting;
• review with management, and the external auditor, Group financial
statements required under UK legislation before submission to
the Board;
• establish, review and maintain the role and effectiveness of the
internal audit function, Group Assurance and the risk function,
whose objective is to provide independent assurance over the
Group’s significant processes and controls, including those in
respect of the Group’s principal risks;
• assume direct responsibility for the appointment, compensation,
resignation, dismissal and the overseeing of the external auditor,
including review of the external audit, its cost and effectiveness;
• pre-approve non-audit work to be carried out by the external auditor
and the fees to be paid for that work, together with the monitoring
of the external auditor’s independence;
• oversee the process for dealing with complaints received by the
Group regarding accounting, internal accounting controls or auditing
matters and any confidential, anonymous submission by employees
of concerns regarding questionable accounting or auditing matters;
and
• adopt and oversee a specific Code of Ethics for all employees which
is consistent with the Group’s overall statement of business ethics.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 89
Governance
Audit Committee report continued
Key activities of the Audit Committee
Audit matters are reviewed at quarterly Audit Committee meetings
throughout the year at which detailed reports are presented for review.
The Audit Committee commissions reports from external advisers, the
Group Risk Director or Group management, either after consideration
of the Group’s key risks or in response to developing issues.
During the year, in order to fulfil the roles and responsibilities of the
Audit Committee, the following matters were considered:
• the suitability of the Group’s accounting policies and practices;
• half year and full year financial results;
• the scope and cost of the external audit;
• the external auditor’s full year report;
• the reappointment of the external auditor, KPMG LLP;
• any non-audit work carried out by the auditor and trends in the
non-audit fees in accordance with the Committee’s policy to ensure
the safeguarding of audit independence;
• the co-ordination of the activities and the work programmes
of the internal and external audit functions;
• the arrangements in respect of Group Assurance including its
resourcing, external support, the scope of the annual internal audit
plan for FY 2024, the level of achievement of that plan and the scope
of the annual internal audit plan for FY 2025;
• periodic internal control and assurance reports from Group
Assurance;
• the Group’s risk management framework for the identification
and control of key risks, its risk and assurance mitigation plan
and the annual assessment of effectiveness of controls;
• review of the Corporate Viability Disclosure on page 53;
• compliance with the Group’s Code of Ethics;
• corporate governance developments;
• the status of material litigation involving the Group; and
• reports on allegations made via the Group’s whistleblowing
procedures and the effectiveness of these procedures,
including a summary of reports received during FY 2024.
Disclosure of significant and other judgements
The Audit Committee has reviewed the key judgements applied in the
preparation of the consolidated financial statements, which are described
in the relevant accounting policies and detailed notes to the consolidated
financial statements on pages 127 to 179.
The Audit Committee’s review included consideration of the following
areas and key accounting judgements:
• Going concern – the headroom on the covenants across both
the secured and unsecured estates and group liquidity, have been
reviewed in detail by management and assessed by the Audit
Committee. The Corporate Viability Disclosure is on page 53.
• Property, plant and equipment valuation – the assumptions
used by management to value the long leasehold and freehold estate
including: estimated fair maintainable trading levels; brand multiples
and use of spot valuations, to ensure a consistent valuation
methodology is in place. The revaluation methodology is determined
by using management judgement, with advice taken from third-party
valuation experts.
• Impairment of short leasehold properties and right-of-use
assets – Short leasehold properties, right-of-use assets, allocated
corporate assets and unlicensed land and buildings are held at cost
less depreciation and impairment. Impairment includes management
judgement to determine site level profit and cashflow forecasts, and
the appropriate allocation of overhead costs to those cashflows.
In addition, the value in use calculation includes estimations of the
discount rate and long-term growth rate.
• Separately disclosed items – judgement is used to determine those
items which should be separately disclosed to allow an understanding
of the adjusted trading performance of the Group. Separately
disclosed items are explained and analysed in note 2.2 of the financial
statements on page 131. This judgement includes assessment of
whether an item is of sufficient size or of a nature that is not consistent
with normal trading activities.
• Pension – judgement is used to determine the value of pension
surplus that has been recognised estimating the expected value
of the surplus to the Company.
Effectiveness of internal audit
The Audit Committee is responsible for monitoring and reviewing the
effectiveness of the Group’s internal audit function. The Audit
Committee meets regularly with management and with the Group Risk
Director and the internal auditor to review the effectiveness of internal
controls and risk management and receives reports from the Group Risk
Director on a quarterly basis.
During each financial period, the Audit Committee completes its annual
review of the effectiveness of the Group’s system of internal controls and
internal audit function, including financial, operational, compliance and
risk management systems.
The annual internal audit plan is approved by the Audit Committee and is
kept under review on a regular basis, by the Group Risk Director, in order
to reflect the changing business needs and to ensure new and emerging
risks are considered. The Audit Committee is informed of any
amendments made to the internal audit plan on a quarterly basis. The FY
2024 internal audit plan was developed through a review of formal risk
assessments, in conjunction with the Risk Committee and the Executive
Committee, together with consideration of the Group’s key business
processes and functions that could be subject to audit.
A similar approach has been employed in relation to the FY 2025 internal
audit plan. The principal objectives of the internal audit plan for FY 2024
were, and remain for FY 2025:
• to provide confidence that existing and emerging key risks are being
managed effectively;
• to confirm that controls over core business functions and processes
are operating as intended; and
• to confirm that major projects and significant business change
programmes are being adequately controlled.
Findings from all audit reports issued by the Group Assurance function
are reviewed by the Audit Committee. Internal audit recommendations
are closely monitored from implementation through to closure via
a recommendation tracking system, which efficiently assists the overall
monitoring of internal audit recommendations to ensure these are
successfully implemented in a timely manner. A summary of the status
of the implementation of internal audit recommendations is made every
period to the Executive Committee and Board and quarterly to the
Audit Committee.
90 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Risk management framework
As disclosed in the ‘Risk and uncertainties’ section on pages 46 to 52
the Risk Committee continues to meet on a quarterly basis to review
the key risks facing the business. Membership of the Risk Committee,
which includes representation from each of the key business functions,
is detailed below:
• Group General Counsel and Company Secretary (Chair of the
Risk Committee)
• Chief Financial Officer
• Commercial and Marketing Director
• Divisional Director (Operations)
• Group HR Director
• Director of Business Change & Technology
• Group Risk Director
• Head of Legal
• Head of Safety
Key risks identified are reviewed and assessed on a quarterly basis in
terms of their likelihood and impact, and are measured on the Group’s
‘Key Risk Heat Map’, in conjunction with associated risk mitigation plans.
In addition, the Risk Committee review includes an assessment of the
material relevance of emerging risks and the continued relevance of
previously identified risks. During FY 2024, Risk Committee meetings
continued to include a cross-functional, detailed review of the Group’s
key risks. This process continues to prove to be effective and adds value
to the continued development and progression of the Group’s approach
to evaluating new and existing risks, supported by robust mitigation
plans.
Actions arising from Risk Committee meetings are followed up by the
Group Risk Director. The Audit Committee reviews the Risk Committee
minutes in addition to undertaking a quarterly review of the Group’s
‘Key Risk Heat Map’.
Confidential reporting
The Group’s whistleblowing policy enables staff, in confidence, to raise
concerns about possible improprieties in financial and other matters and
to do so without fear of reprisal. Details of the policy are set out in the
Group’s Code of Ethics. The Audit Committee receives quarterly reports
on whistleblowing incidents and remains satisfied that the procedures
in place are satisfactory to enable independent investigation and follow
up action of all matters reported. The Board also receives a report on
whistleblowing in the Group General Counsel and Company Secretary’s
regular report to Board meetings.
External auditor appointment
Following shareholder and Board approval, KPMG LLP was appointed
as the auditor in 2022, following a formal tender process in 2020 to
ensure the continued objectivity, independence and value for money of
the statutory audit. KPMG LLP is therefore responsible for undertaking
the FY 2024 audit.
The Audit Committee has considered the guidance in relation to rotation
including the proposed transition rules which will be considered when
recommending the appointment of the auditor in future years. The Group
has complied throughout FY 2024 with the provisions of The Statutory
Audit Services for Large Companies Market Investigation (Mandatory
Use of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014.
External auditor’s independence
The external auditor should not provide non-audit services where it
might impair their independence or objectivity to do so. The Audit
Committee has established a policy to safeguard the independence
and objectivity of the Group’s external auditor. That policy was reviewed
in FY 2024 and a copy of it is appended to the Audit Committee’s terms
of reference and is available on the Group’s website.
Pursuant to that policy, services that have been pre-approved by the
Audit Committee (i.e. covenant reporting) do not exceed in any year
more than 70% of the average audit fee paid to that audit firm over the
past three years, unless prior approval has been obtained from the FRC.
The Audit Committee remains confident that the objectivity and
independence of the external auditor are not in any way impaired by
reason of the non-audit services which they provide to the Group.
That policy also includes an extensive list of services which the audit firm
may not provide or may only provide in very limited circumstances where
the Group and the audit firm agree that there would be no impact on the
impartiality of the external audit firm.
Details of the remuneration paid to the external auditor, and the split
between audit and non-audit services, are set out in note 2.3 of the
financial statements on page 134.
External audit annual assessment
The Audit Committee assesses annually the qualification, expertise,
resources and independence of the Group’s external auditor and the
overall effectiveness of the audit process. The Chief Financial Officer,
Group General Counsel and Company Secretary, Chair of the Audit
Committee and Group Risk Director meet with the external auditor to
discuss the audit, significant risks and any key issues included on the
Audit Committee’s agenda during the year.
In the prior year, the FY 2022 audit of Mitchells & Butlers plc by KPMG
was reviewed by the FRC’s Audit Quality Review team (‘AQR’) as part of
the FRC’s annual inspection of audit firms. There were no ‘key findings’
reported in the inspection and one ‘other finding’ was reported in
relation to historical data used in the valuation of the freehold estate.
KPMG agreed a proposed action with the FRC in relation to this and have
confirmed that this has been incorporated into planned procedures going
forward. The Committee was pleased to note that the AQR identified an
area of good practice in relation to the robust challenge of management’s
property valuation model.
Fair, balanced and understandable statement
One of the key governance requirements of the Annual Report and
Accounts is for the report and accounts, taken as a whole, to be fair,
balanced and understandable, and that they provide the information
necessary for shareholders to assess the Group’s position, performance,
business model and strategy. Therefore, upon review of the financial
statements, the Audit Committee and the Board have confirmed that
they are satisfied with the overall fairness, balance and clarity of the
Annual Report and Accounts, which is underpinned by the following:
• review of the formal review processes at all levels to ensure the
Annual Report and Accounts are factually correct;
• clear guidance being issued to all contributors to ensure a consistent
approach; and
• formal minutes of the Year End Working Group comprised of relevant
internal functional representatives and appropriate external advisers.
Jane Moriarty
Chair of the Audit Committee
26 November 2024
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 91
Governance
Report on Directors’
remuneration
“I am pleased to present the Directors’ Remuneration Report in respect
of the financial period which ended on 28 September 2024.”
Amanda Brown
Chair of the Remuneration Committee
Dear Shareholder,
I am pleased to present this year’s Directors’ Remuneration Report on
behalf of the Remuneration Committee (‘the Committee’). The report
provides context and insight into our pay arrangements for Executive
Directors and Non-Executive Directors, including the assessment of
FY 2024 performance and pay. The report, together with this letter,
will be put to an advisory vote at the 2025 AGM.
The Committee was delighted that our new remuneration policy was
approved at the 2024 AGM with 95% of shareholders voting in favour
of the policy. As noted in last year’s report my aim as Committee Chair
is to engage constructively with shareholders and the engagement with
all stakeholders as part of the review process was very encouraging.
The Committee was also pleased that the 2023 Report on Directors
Remuneration received the support of 99% of our shareholders.
Background and business context
The hospitality industry continues to operate in an extremely challenging
environment of cost inflation, a tight labour market and low consumer
confidence. As a result, the sector has seen a number of venues close
yet, despite these challenges, the industry has remained resilient and
optimistic. In this context, Mitchells & Butlers’ performance over FY 2024
has been exceptionally strong. Like-for-like sales
a
increased by 5.3% and
outperformed the market consistently throughout the year. Costs have
been well controlled and mitigation of significant cost pressures (such as
employment costs) has been proactive via our Ignite initiatives. Margins
have improved and Adjusted Operating Profit is ahead of expectations.
85.3
Best ever employee
engagement score
4.51
Record guest review scores
41%
(52 week basis)
Adjusted Operating Profit
a
1.7%
Average market
outperformance over
the year
5.3%
Like-for-Like Sales Growth
92 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
I am also very pleased that, as well as delivering excellent financial
results, we have performed strongly across all stakeholder measures,
clearly demonstrating the link between engaged employees, satisfied
guests and improved sales and profitability. Our business scorecard
includes non-financial measures that encompass Guest Health,
Employee Engagement and Safety; all three of these areas delivering
record high scores in 2024.
As well as our direct operating measures, the business has also made
a positive impact on the environment and the community. Last year
I made specific reference to the progress being made against our
sustainability targets and it is encouraging that this good progress has
continued. Overall our emissions have reduced by 14% from the 2019
baseline, 98% of our operational waste is diverted from landfill and our
food waste has been reduced by 23% from the 2019 baseline. We are
also very proud of our partnership with Social Bite, a homelessness
charity, and in particular our involvement in their Jobs First Programme
which helps to provide long-term job opportunities.
Looking ahead, we consider the business to be well positioned to
outperform the sector, and our priorities are to continue to grow sales
whilst seeking further opportunities to improve efficiency. Once again,
key to this success will be our Ignite programme and work has already
begun on a new round of initiatives. This combined with our capital plan,
portfolio of brands and estate locations, gives the Board confidence
in the prospects for the business in the coming year.
Further detail on the performance of the business over the year can
be found in the Chief Executive’s business review on pages 20 to 22.
Remuneration in FY 2024
Annual Bonus
Financial measures – Adjusted Operating Profit
(outcome 70% out of 70%)
The financial targets for FY 2024 were set at a time when the outlook
for the financial period once again remained highly uncertain with a
wide range of macroeconomic factors continuing to impact the business.
These included stubbornly high inflation, geo-political instability, most
notably from the war in Ukraine, and an uncertain cost outlook
particularly in relation to employment, food and energy costs.
The financial target set for FY 2024 at the start of the year was considered
by the Committee to be challenging when taking into account all of the
relevant factors at the time the targets were agreed. The main drivers of
cost inflation were anticipated to be labour costs followed by drink, food
and logistics. Energy costs were forecast to fall over the year, although
this reduction was contingent on the outlook for energy pricing
remaining favourable. An on-target performance would have required
sales growth of at least 5% and for the net cost headwinds of c£65m to be
offset through improved margins and efficiencies.
Actual sales across the period were £2,610m, an increase of 6.1%.
On a like-for-like basis sales increased by 5.3%
a
. Our sales performance
continued to outperform the market
b
consistently over the year.
Adjusted Operating Profit
a
across the period was £312m; an increase of
41% on the prior period on a 52-week basis, and near the top of the range
of consensus forecasts which had already been increased through the
year. This performance was significantly ahead of the budget set at the
start of the year (£269m), and reflected not only the strong sales
performance over the year, but also an improvement in margins which
recovered at a faster pace than expected. This improvement in margins
was driven in large part by our programme of Ignite initiatives, combined
with well controlled costs across the business.
Non-financial measures – (outcome 30% out of 30%)
The non-financial measures encompass Guest Health, Employee
Engagement and Safety, forming an important part of the annual
incentive plan. Bonus can only be earned if 97.5% of the Adjusted
Operating Profit target is achieved.
Guest Health performance is measured as a combination of online
review scores and guest complaints. Over the period our online review
scores have averaged 4.51, representing a best ever score for this
measure. Very good progress has also been made on guest complaints,
which are measured as a ratio of complaints received for every 1,000
meals served. Again, performance has been strong in this area building
on progress made across FY 2023 with just 0.60 complaints for every
1,000 meals served. This combined performance has resulted in
a maximum payment for the guest element.
Employee engagement is measured at two points during the year. In the
summer employees are invited to complete a comprehensive survey,
‘YourSay’, and this is supplemented by a shorter pulse survey in February.
This year around 70% of employees completed a survey and the overall
score across the two surveys was 85.3, a record high for employee
engagement, and an increase of almost three points on the prior year
score, resulting in a maximum payment for this element.
A new measure of safety was introduced in FY 2024 that encompasses
four areas of safety: Food Hygiene (as measured by the National Food
Hygiene Rating System), Food Practices, Allergens and Fire Safety.
The measure assesses the percentage of our businesses that have scored
at least a 4 or 5 rating in each of the elements in a combined score. The
target set at the start of the year was for an overall performance of 96.2%
of all ratings to be at a 4 or 5. The year end performance was 97.3%
resulting in an on target/maximum payment for this element.
Final Bonus Outcome
In determining the final bonus outcome, the Committee considered
the wider performance of the Group across the financial period as part
of its overall quality of earnings assessment. The outcome is reflective
of a very strong performance, both relative to our expectations and to
the sector as a whole and a faster than expected recovery of profits,
driven by particularly strong sales growth in the first half of the year
underpinned by improving margins.
The strong performance over the year has been achieved whilst
also investing in pay and other benefits to support our employees,
particularly at the frontline, which was especially important given the
very real cost of living pressures that continued particularly in the first
part of the year, when interest rates remained high and energy costs
were yet to fall.
We are proud of the performance over the year, which was achieved
through hard work and in a manner which is consistent with the
experience of all stakeholders, including that of our employees and
customers as evidenced above.
In taking all these factors into account, the Committee was satisfied that
the overall formulaic outcome against our targets was consistent with
our performance over the year and as such no discretion was exercised
when determining the resultant annual bonuses. As a result of this
review of performance, bonuses of 100% of base pay (100% of the
maximum) were awarded to our CEO and CFO respectively.
a. The Directors use a number of alternative performance measures (APMs)
that are considered critical to aid the understanding of the Group’s performance.
Key measures are explained on pages 186 to 189 of this Report.
b. As measured by the CGA Business Tracker.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 93
Governance
FY 2022 RSP Vesting
During FY 2022, share awards were made to Phil Urban and Tim Jones
under the Restricted Share Plan (‘RSP’) to the value of 100% of their
respective salaries.
Vesting of the RSP was subject to the satisfactory assessment of
performance against three qualitative underpins, discussed in further
detail on page 105. The Committee is satisfied that these have been
met and, as such, the 2022 RSP award will vest on 28 November 2024.
In addition, the Committee reviewed whether the Executive Directors
might unduly benefit from a windfall gain on these awards, taking into
consideration a number of factors including the strong underlying
business performance, the current share price compared with the share
price at the time of the grant (236p) and share price movements prior to
the award and over the performance period. After careful consideration
the Committee concluded that participants will not benefit from a
windfall gain on the FY 2022 RSP awards and therefore has determined
that no adjustment is required.
Remuneration for FY 2025
Fixed Pay (Base Pay, Pensions and Benefits)
In reviewing Executive Director salaries, the Committee took account of
market positioning and the level of increases applied to Executive Directors
in other organisations but most importantly felt that the increases applied
to Executives should be below that of other colleagues and especially
those in frontline positions.
Overall pay increases have been 8.9% over the year with hourly paid
frontline employees who are typically the lowest paid employees in the
group, seeing the largest increases.
With effect from 1 January 2025 Phil Urban’s salary will increase
to £625,725 (3%) and Tim Jones’s to £523,250 (3%).
Executive Directors pension contributions remain aligned with that
of the wider workforce at 4%.
There are no changes to the benefits available to Executive Directors.
Annual Bonus
The Committee believes that the annual bonus scheme for FY 2024 was
successful in driving the right behaviours across the business, and as
such has determined that the annual bonus scheme for FY 2025 will be
unchanged. The maximum opportunity will remain at 100% of salary
for our Executive Directors.
Performance Share Plan (‘PSP’) award FY 2025 to FY 2027
A PSP award is due to be made in respect of the FY 2025 to FY 2027
performance period. The new PSP was introduced last year and no
changes are proposed to the opportunity level or the measures and
weightings for Executive Directors.
Therefore, the overall opportunity for Executive Directors will remain at
200% of base salary and the measures and weightings (as a percentage
of maximum) will apply as follows: Operating Cashflow (70%), Earnings
Per Share (‘EPS’) growth (20%), and a sustainability measure based on
reduction in Scope 1, 2 & 3 emissions (10%). Full details of the proposed
performance measures and targets are set out on page 106.
In conclusion, FY 2024 has been a very strong year and the Committee
is satisfied that the Remuneration Policy approved at the 2024 AGM
is operating as intended and supports appropriate outcomes for the
performance of the business over the year, whilst being cognisant of the
wider economic context including appropriate governance considerations.
The remainder of the report sets out in more detail our overall approach
to Executive Remuneration, and how this aligns to the strategy of the
business and the interests of our stakeholders. I look forward to your
continued engagement and feedback and hope you will join the Board
in supporting our FY 2024 outcomes at the 2025 AGM.
Amanda Brown
Chair of the Remuneration Committee
26 November 2024
Report on Directors’ remuneration continued
The information below summarises the FY 2024 annual bonus performance for our Executive Directors.
Maximum
%
Threshold Target Maximum Outcome Achieved
%
Adjusted operating profit 70% £255.5m £269m £277m
Actual: £312m
70%
Guest health*
Review Score
Complaint Ratio
15% 0 1 2
Actual: 2
15%
Employee engagement 10% 81.5 82.5 83.5
Actual: 85.3
10%
Safety 5% 96.2% 96.2% 96.2%
Actual: 97. 3%
5%
Total 100% 100%
* Combines guest review scores and complaints see page 103 for more details.
94 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Other InformationFinancial StatementsStrategic Report
Introduction Governance
Mitchells & Butlers plc Annual Report and Accounts 2024 95
2016 2017 2018 2019 2020 2021 2022 2023 2024
£613
£89
£15
£509
£624
£91
£15
£518
£760
£89
£16
£509
£146
£1,925
£91
£16
£516
£423
£879
£553
£70
£15
£468
£624
£76
£14
£534
£807
£64
£15
£546
£182
£1,578
£40
£15
£581
£390
£552
£1,919
£599
£680
£26
£15
£599
£515
£75
£15
£425
£526
£76
£16
£434
£638
£75
£16
£425
£122
£1,392
£76
£16
£432
£354
£514
£465
£59
£15
£391
£524
£63
£14
£447
£677
£53
£15
£457
£152
£
1,609
£501
£569
£22
£16
£501
£1,324
£462
£326
£34
£16
£486
2016 2017 2018 2019 2020 2021 2022 2023 2024
Remuneration at a glance
Report on Directors’ remuneration continued
Remuneration key:
Base pay Benefits Pension Annual bonus Long-term incentives
Phil Urban
Chief Executive
(£’000)
Tim Jones
Chief Financial Officer
(£’000)
FY 2024 Performance
The following ‘Remuneration at a Glance’ section provides a short summary that demonstrates that our overall approach to Executive Remuneration
has been and continues to be measured, well balanced and appropriate.
Summary of Executive Directors’ Total Remuneration
The charts below set out the CEO and CFO earnings history from 2016 onwards, the latter being the first full year Phil Urban was in place as CEO.
The Committee continued to review the appropriateness of remuneration decisions, and in particular variable remuneration outcomes. In doing so,
it considered overall business performance as well as the wider experience of our key stakeholders, namely our customers, colleagues, supplier
partners and shareholders, and our wider communities. Balancing the needs of all our stakeholders continues to be at the heart of our purpose.
In particular, the Committee considered the following factors throughout the year in determining remuneration decisions:
Key stakeholder Factors considered by the Committee
Customers • Year-on-year improvements in Guest Health Scores
• Very strong safety scores and focus on allergens
Colleagues • The number of eligible employees receiving a bonus payout in the year
• Number of apprentices in learning
• Investments in pay and benefits, including the introduction of a Wagestream to improve financial wellbeing
• Health and wellbeing initiatives including mental health support in conjunction with the Samaritans
• Establishing of employee network groups to support our diversity and inclusion agenda
Suppliers • Close working relationships maintained during supply chain challenges
• Accreditations e.g. Tier 3 Business Benchmark on Farm Animal Welfare rating
Shareholders • Sales performance consistently ahead of the market
• Strong profit growth and improved cashflow performance
• Continued to pay down debt
Community • Work with Social Bite
• Strategic charity partnership with Shelter
Appropriateness of remuneration decisions
96 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Current shareholding Shareholding requirementsOwned shares
Outstanding unvested shares not subject to further performance conditions
Outstanding unvested shares subject to further performance conditions/underpins
How Executive Directors are building towards shareholding requirement
The table below shows the current shareholding as a percentage of base pay, what the shareholding as a percentage of base pay would be once
unvested shares not subject to further performance conditions are released (such as deferred bonus shares), and then the shareholding taking into
account unvested shares that are subject to performance conditions. Shareholdings are calculated based on the average share price over the final
three months of the financial period; for FY 2024 this was 299.7p (FY 2023 219.8p).
Mitchells & Butlers’ remuneration principles
When determining Executive Director remuneration policy, the
Remuneration Committee addresses each of the factors under Provision
40 of the 2018 UK Corporate Governance Code and these are also
reflected in our principles:
Shareholder alignment
A high proportion of reward is delivered in the form of equity, ensuring
Executives have strong alignment with shareholders.
Competitive
Providing reward that promotes the long-term success of the business
whilst enabling the attraction, retention and motivation of high-calibre
senior Executives.
Performance-linked
A significant proportion of an Executive Director’s reward is linked
to performance, with a clear line of sight between the outcomes
of the business and the delivery of shareholder value.
Straightforward
The remuneration structure is simple to understand for participants and
shareholders, and is aligned to the strategic priorities of the business.
These same principles apply throughout the organisation and are
adapted as appropriate for specific employee groups with a different
emphasis on certain principles in comparison to Executive Directors.
This is illustrated in the table on page 101 which sets out remuneration
below Executive Director level.
For senior management, a much greater proportion of the overall reward
package is performance-linked and therefore is variable and at risk,
whereas for our hourly paid colleagues a greater weighting applies
to the competitive and straightforward principles as these factors are
more important to the attraction and retention of these employees.
246% 328% 873%
250%
229% 305% 852%
200%
Phil Urban (Current salary £607,500)
Tim Jones (Current salary £508,000)
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 97
Governance
Report on Directors’ remuneration continued
Alignment of Executive pay to strategy
The table below sets out how the three strategic priorities of the business align to Executive remuneration:
Strategic priority Link to Executive remuneration
Annual
Bonus PSP
Building a more
balanced business
Strong operating performance supports
the delivery and sustainability of the capital
plan and estate optimisation.
Adjusted Operating Profit delivery is the main
component of the annual bonus plan.
Operating Cashflow supports cumulative cash
generation to enable debt repayment whilst EPS
incentivises profit recovery.
A more balanced business delivers brands
and food and drink offers in an
environment that guests want to enjoy.
The Guest Health element of the annual bonus plan
provides a strong indicator of the success of each
business. There is a clear correlation between strong
Guest Health performance and sales performance.
High-quality engaged teams are
fundamental to the success of any
business.
The engagement element of the annual bonus plan
measures how our teams feel about working for
Mitchells & Butlers, and, in turn, the service they
provide to guests.
Instilling a more
commercial
culture
A commercial culture improves controls,
efficiency, purchasing and pricing, driving
both improved cashflow and operating
performance.
Adjusted Operating Profit delivery is the main
component of the annual bonus plan.
Cashflow is the main component of the PSP.
Commercial decisions must be guest-
focused and benefit from the input
of customer feedback.
The Guest Health metric quickly demonstrates where
decisions are right or wrong and Executives are
incentivised to react.
Developing and evolving a commercial
culture requires high levels of employee
engagement and business awareness.
The employee engagement element of the annual
bonus plan supports and underpins the development
of culture.
Driving an
innovation
agenda
Innovation at small and large scale is an
engine for improved sales and, therefore,
cash and profit generation.
Adjusted Operating Profit delivery is the main
component of the annual bonus plan.
Operating Cashflow and EPS make up the majority
of the PSP performance assessment.
Guests’ expectations continue to increase,
demanding higher standards of service and
digital capability.
The Guest Health element of the annual plan provides
valuable actionable feedback and incentivises action.
Innovation involves change, and delivery
of change requires strong employee
engagement.
The employee engagement element of the annual
bonus plan incentivises action to maintain and improve
employee engagement.
98 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Overview of remuneration policy and its implementation
for FY 2025
The key elements of our remuneration policy are shown below, along with details of how we plan to implement the policy specifically for 2025 and if
any of the elements impact on future remuneration.
Policy 2025 2026 2027 2028 2029 Implementation for 2025
Base pay
Increases in line with wider workforce,
except for exceptional circumstances.
Base pay
Effective
1 Jan 2024
Effective
1 Jan 2025
%
increase
Phil Urban 607,500 625,725 3.0
Tim Jones 508,000 523,250 3.0
Average
employee
increase %
8.9
(actual)
7.3–9
(projected)
Benefits
Benefits normally include (but are
not limited to) private healthcare,
life assurance, annual health check,
employee assistance programme,
use of a Company vehicle or cash
equivalent, and discounts on food
and associated drinks purchased
in our businesses. Private healthcare
is provided for the Executive, spouse
or partner and dependent children.
In line with FY 2024.
Pension
Executive Directors’ contributions
aligned with the wider workforce
pension rate (currently 4% of salary).
Unchanged
Phil Urban: 4% of salary.
Tim Jones: 4% of salary.
Short-term
incentives
Normal maximum of 100% of salary.
At least 50% of performance
conditions to be based on financial
measures, the remainder based on
non-financial or personal business
objectives.
50% of the award to be deferred as
shares and released in two equal
tranches, after 12 and 24 months.
The following maximum opportunities
will apply in FY 2025 (unchanged).
Phil Urban: 100% of salary.
Tim Jones: 100% of salary.
Long-term
incentives
Normal maximum of 200% of salary,
exceptional maximum of 250%
of salary.
Performance will be measured over
no less than three financial years.
At least 70% of the award will
be based on the achievement of
financial measures, the remainder
based on non-financial, strategic
or ESG measures.
Vesting after three years, with a
two-year holding period post-vesting.
The following maximum opportunities
will apply in FY 2025 (unchanged).
Phil Urban: 200% of salary.
Tim Jones: 200% of salary.
Performance measures for FY 2025 are:
Operating Cashflow – (70%)
Adjusted EPS – (20%)
Sustainability (Scope 1,2 &3) – (10%)
Shareholding
requirement
250% of salary for the CEO; 200% of
salary for all other Executive Directors.
All Executive Directors are required to
maintain shareholding requirements
in full for two years post-cessation.
Base pay
At start of
FY 2024
At start of
FY 2025
Phil Urban 148% 246%
Tim Jones 133% 229%
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 99
Governance
Report on Directors’ remuneration continued
Illustrations of remuneration policy
The charts below show an estimate of the remuneration that could
be received by Executive Directors under the remuneration policy.
The charts also show the impact of a 50% increase in share price
on the LTIP outcome.
Chief Executive
£665,754
£1,604,342
£2,542,929
£3,168,654
Minimum
41.5%
19.5%
39.0%
26.2%
24.6%
49.2%
21.0%
19.75%
39.5%
19.75%
£1,578,000
40.3%
35.0%
£1,919,000
33.4%
31.2%
35.4%
24.7%
On-target Maximum
FY 2024
Actual
FY 2023
Actual
Maximum
+50% Share
price gain
100%
Chief Financial Officer
£560,180
£1,345,055
£2,129,930
£2,653,180
Minimum
41.6%
19.5%
38.9%
26.3%
24.6%
49.1%
21.1%
19.7%
39.4%
19.8%
£1,324,000
40.5%
34.9%
£1,609,000
33.5%
31.1%
35.4%
24.6%
On-target Maximum
FY 2024
Actual
FY 2023
Actual
Maximum
+50% Share
price gain
100%
The performance scenarios demonstrate the proportion of maximum
remuneration which would be payable in respect of each remuneration
element at each of the performance levels. In developing these
scenarios, the following assumptions have been made:
Minimum
Only the fixed elements of remuneration are payable. The fixed element
consists of base salary, benefits and pension. Base salary is the salary
effective from 1 January 2024. Benefits are based on actual FY 2024
figures and include company car, healthcare and taxable expenses.
Pension is aligned with the rate available to the wider workforce (4%).
On-target
In addition to the minimum, this reflects the amount payable for on-target
performance under the short- and long-term incentive plans:
• 50% of maximum (50% of base salary for the Chief Executive and
Chief Financial Officer) is payable under the short-term incentive
plan; and
• 50% of maximum (100% of base salary for the Chief Executive
and Chief Financial Officer) is payable under the PSP.
Maximum
In addition to the minimum, maximum payment is achieved under both
the short- and long-term incentive plans such that:
• 100% of base salary is payable under the short-term incentive plan
for the Chief Executive and Chief Financial Officer; and
• 200% of base salary for the Chief Executive and Chief Financial
Officer is payable under the PSP.
Share price gain
This shows the impact a 50% increase in the share price would have
on the maximum PSP outcome.
Share price gain Long-term incentives
Short-term incentives Fixed pay
Share price gain Long-term incentives
Short-term incentives Fixed pay
100 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
How our policy cascades to colleagues and
workforce engagement
Remuneration below Executive Director level
The table below demonstrates how the key elements of Executive pay align with the wider workforce:
Job Group
(Number of employees) Base pay Annual bonus Long-term incentives All-employee share plans
Executive Directors (2) Pay broadly around
mid-market levels.
Overall, increases
(in percentage terms)
consistent across all
salaried employee groups.
Bonus schemes for all
schemes align to the
business scorecard.
The majority of bonus
opportunity is linked to
financial performance.
Measures and targets for
long-term incentive plans
consistent for all
participants.
All employees can
participate in any of the
all-employee share
schemes, subject to
qualifying service,
building a stake in
the business.
Executive Committee (8)
Senior management
(c. 40)
Retail Support Centre
(c. 1,10 0)
Retail managers (c. 5,500)
Retail team members
(c. 41,000)
Pay set in line with market
requirements and closely
monitored.
Base pay for many
employees is ahead of
the statutory minimums.
Many employees benefit
from tips and service
charges, and in line
with the Employment
(Allocation of Tips)
Act 2023 100% of these
earnings are passed on
to employees.
Our pay approach is aimed at providing regular and
predictable earnings through competitive base pay
for our retail team members. This is valued more highly
than variable pay elements by retail team members and
is in line with our ‘competitive’ and ‘straightforward’
remuneration principles.
Workforce engagement
We welcome and encourage feedback from employees on a broad range of topics including business improvement, engagement and remuneration.
This feedback is gathered in a number of ways throughout the year as shown in the illustration below:
Remuneration Committee
Employee survey
Outcomes reviewed
by the Remuneration
Committee and taken
into account when
setting remuneration
policy.
CEO roadshows
The CEO and CFO hold
regular roadshows that
allow both support
centre colleagues and
General Managers an
opportunity to discuss
business issues and
provide feedback.
Employee forum
Elected representatives
have direct access to the
Executive Committee
as part of the forum
and where necessary
Executive remuneration
matters are brought
to the attention
of the Remuneration
Committee Chair.
Overview of pay and
policy decisions
Committee members
are updated on
employee terms and
conditions and made
aware of significant
changes to policies
and other pay-related
matters.
Nominated
Non-Executive
Director
A Non-Executive
Director (Dave Coplin)
has been appointed to
engage with employees
and report back to the
Board. Dave Coplin
is a member of the
Remuneration
Committee.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 101
Governance
Report on Directors’ remuneration continued
The Committee is regularly updated on pay and conditions applying
to Group employees alongside other workforce-related matters.
Where significant changes are proposed to employment conditions
and policies elsewhere in the Group, or there are important employee-
related projects underway, these are highlighted for the attention of the
Committee at an early stage. Over the course of FY 2024, these updates
have again focused on employee engagement, a review of bonus and
incentive schemes below Executive Committee level, progress against
our diversity and inclusion agenda and plans to roll out a new talent
management system that will help to support the development of
our people.
The Committee takes into account the base pay review budget applicable
to other employees when considering the pay of Executive Directors. The
Committee considers a broad range of reference points when determining
policy and pay levels. These include external market benchmarks as well
as internal reference points. Any such reference points are set
in an appropriate context and are not considered in isolation.
Obtaining and understanding the views of our employees, including
in relation to Executive Remuneration, is an important consideration for
the Committee when developing and operating our overall approach to
remuneration across Mitchells & Butlers. In addition to our approach to
communicating with our employees, we also welcome feedback and all
employees are invited to take part in our employee engagement surveys.
These provide all employees with an opportunity to give anonymous
feedback on a wide range of topics of interest or concern to them.
The Committee reviews these results and any significant concerns over
remuneration would be considered separately by the Committee and,
if appropriate, taken into account when determining the remuneration
approach and its implementation.
An employee forum is normally held twice every year, which gives
an opportunity for employees to ask questions of senior management
via elected representatives, and which from FY 2020 has been attended
by Dave Coplin. In 2024, two forums were held in March 2024 and
September 2024. The Executive team finds these forums very valuable,
as the format allows for a more in-depth discussion and understanding
that is not possible through other channels such as surveys.
In addition, in his role as the nominated Non-Executive Director, Dave
Coplin undertakes a number of activities ranging from visits to our
businesses to meet and discuss issues with employees, to focus groups
with specific employee groups. Dave meets regularly with members of
the Human Resources team and is also supporting the business in how
it may utilise technology to better communicate with all employees,
in particular through the deployment of a new employee app.
The views of employees in relation to Executive remuneration have been
sought in the past and this issue was not proved to be an area of interest
or concern for employees at this time. Our engagement survey has a
section that allows employees to anonymously raise any concerns they
may have on any matter, and in 2024 there were over 27,000 comments
recorded, none of which related to senior management pay.
102 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
This section details the remuneration payable to the Executive and Non-Executive Directors (including the Company Chair) for the financial period
ended 28 September 2024 and how we intend to implement our remuneration policy for FY 2025. This report, along with the Chair’s annual
statement, will be subject to a single advisory vote at the 2025 AGM.
Pay outcomes
The tables and related disclosures set out on pages 103 to 110 on Directors’ remuneration, deferred annual bonus share awards (‘STDIP’), PSP and RSP
share options, Share Incentive Plan, Save as You Earn Plan (‘SAYE’) and pension benefits have been audited by KPMG LLP where explicitly indicated.
Executive Directors’ remuneration
The table below sets out the single figure remuneration received by the Executive Directors during the reporting year and prior year.
Executive Directors (audited by KPMG)
Basic salaries
£000
Taxable
benefits
a
£000
Short-term
incentives
£000
Pension-
related
benefits
b
£000
Long-term
incentives
c
£000
Other
d
£000
Total
remuneration
£000
Total
fixed pay
£000
Total
variable pay
£000
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
Phil Urban 599 581 15 15 599 552 26 40 680 390 2.5 3 1,921.5 1,581 642.5 639 1,279 942
Tim Jones 501 486 16 16 501 462 22 34 569 326 2 2 1,611 1,326 541 538 1,070 788
Sub-total
Executive
Directors 1,100 1,067 31 31 1,100 1,014 48 74 1,249 716 4.5 5 3,532.5 2,907 1,183.5 1,177 2,349 1,730
a. Taxable benefits for the year comprised car allowance, healthcare and taxable expenses.
b. Based on the value of supplements paid in lieu of contributions to the Company Scheme.
c. The value of the RSP vesting is based on the average share price in the last three months of the financial period (299.7p) multiplied by the number of shares vesting. The FY 2023
figure has been restated to reflect the actual value on vesting based on share price of 224.4p.
d. Includes free shares awarded under the SIP.
Annual bonus
Details of the measures and targets applying to the 2024 annual bonus plan are set out below
a
:
Threshold – 95%
of Target
(% of salary
payable)
Target
(% of salary
payable)
Maximum – 103%
of Target
(% of salary
payable)
Outcome
(% of salary
payable)
Adjusted Operating Profit
(70%) (52 weeks)
£255.5m
(7.5%)
£269m
(35%)
£277m
(70%)
£312m
b
(70%)
Threshold Target Performance (Score)
Calculation of outcome
(% of salary payable)
Outcome
(% of salary
payable)
Guest Health (15%) Each element is scored 1 if better than target,
0 if between threshold and target,
and -1 if below threshold.
Social Media Score
4.33 4.43 4.51 (1)
• If the sum of these scores is +2 then
maximum bonus is paid (15%).
• If the sum of these scores is +1 then an
on-target payment would be made (7.5%).
• If the sum of these scores is 0 then threshold
bonus is paid (3.75%).
2
(15%)
Complaints Ratio
0.80 0.70 0.60 (1)
Threshold
(% of salary
payable)
Target
(% of salary
payable)
Maximum
(% of salary
payable)
Outcome
(% of salary
payable)
Employee Engagement
(10%)
a
81.5
(2.5%)
82.5
(5%)
83.5
(10%)
85.3
(10%)
Combined Safety Score
(5%)
96.2%
(5%)
97.3%
(5%)
a. The measures, targets and outcomes are not audited.
b. Payout is on a straight-line basis between points.
Annual report on remuneration
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 103
Governance
Report on Directors’ remuneration continued
Financial measures
Adjusted Operating Profit (Outcome 70% out of 70%)
The financial targets for FY 2024 were set at a time when the outlook for the financial period once again remained highly uncertain with a wide range
of macroeconomic factors continuing to impact the business. These included stubbornly high inflation, geo-political instability, most notably from
the war in Ukraine, and an uncertain cost outlook particularly in relation to employment, food and energy costs.
The financial target set for FY 2024 at the start of the year was considered by the Committee to be challenging when taking into account all of the
relevant factors at the time the targets were agreed. The main drivers of cost inflation was anticipated to be employment costs followed by drink,
food and logistics. Energy costs were forecast to fall over the year although any reduction was contingent on the outlook for energy pricing remaining
favourable. An on-target performance would have required sales growth of at least 5% and for the net cost headwinds of c. £65m to be offset through
improved margins and efficiencies.
Actual sales across the year were £2,610m, an increase of 6.1% and c.£25m ahead of budget. On a like for like basis sales increased by 5.3%. Our sales
performance continued to outperform the market
1
consistently across the year.
1 As measured by the CGA Business Tracker.
Adjusted Operating Profit across the period was £312m; an increase of 41% on the prior period on a 52 week basis, and near the top of the range of
consensus forecasts which had already been increased through the year. This performance was significantly ahead of both the target set at the start
of the year (£269m) and the performance required to for a maximum payout (£277m). This reflected not only the strong sales performance over the
year but also an improvement in margins which recovered at a faster pace than expected. This improvement in margins was driven in large part by our
programme of Ignite initiatives combined with well controlled costs across the business.
Non-financial measures
The non-financial measures encompass Guest Health, Employee Engagement and Safety, and form an important part of the annual incentive plan.
Bonus can only be earned if 97.5% of the Adjusted Operating Profit target is achieved.
Guest Health (15% out of 15%)
Guest Health performance is measured as a combination of online review scores and guest complaints. Over the year our online review scores have
averaged 4.51, representing a best ever score for this measure. Very good progress has also been made on guest complaints, which are measured
as a ratio of complaints received for every 1,000 meals served. Again, performance has been strong in this area building on progress made across
FY 2023, with just 0.60 complaints for every 1,000 meals served in FY 2024. This combined performance has resulted in a maximum payment for
the guest element.
Employee Engagement (10% out of 10%)
Employee engagement is measured at two points during the year. In the summer employees are invited to complete a comprehensive survey,
‘YourSay’, and this is supplemented by a shorter pulse survey in February. This year around 70% of employees completed a survey and the overall
score across the two surveys was 85.3, a record high for employee engagement and an increase of almost three points on the prior year score,
resulting in a maximum payment for this element.
Safety (5% out of 5%)
A new measure of safety was introduced in FY 2024 that encompasses four areas of safety, Food Hygiene (as measured by the National Food Hygiene
Rating System), Food Practices, Allergens and Fire Safety. The measure assesses the percentage of our businesses that have scored at least a 4 or 5
rating in each of the elements in a combined score. The target set at the start of the year was for an overall performance of 96.2% of all ratings to be
at a 4 or 5. The year end performance was 97.3% resulting in an on target/maximum payment for this element.
Overall outcome
The total bonus awarded to Executive Directors is 100% of salary, resulting in bonus payments of £598,731 and £500,750 to Phil Urban and Tim Jones
respectively.
In line with our policy, half of any bonus award will be deferred into shares under the Short Term Deferred Incentive Plan (‘STDIP’), which will be
released in two equal amounts after 12 and 24 months. Bonus Share awards are subject to continued employment. These shares must be retained
until the shareholding requirement is met and are subject to a post-cessation holding period.
104 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Long-term incentives vesting during the year
FY 2022–24 RSP vesting
During FY 2022 share awards were made to Phil Urban and Tim Jones under the terms of the RSP to the value of 100% of their respective salaries.
Awards were subject to a performance underpin, meaning that the Committee took into account the following factors (amongst other things)
when determining whether to exercise its discretion to adjust the number of shares vesting:
Underpin condition Commentary
• if any adjustments have been made to
annual bonus outcomes for each of the
three years covered by the vesting period
for awards under the RSP;
No adjustments were made to any bonus outcomes during the vesting period.
The approval of any annual bonus payout is subject to a robust quality of earnings assessment
that considers all aspects of scorecard performance and a range of other performance factors
to determine if the annual bonus outcome was consistent with overall business performance.
This annual assessment is then used as a basis to assess performance against these factors over
the course of the RSP vesting period.
• whether there has been material damage
to the reputation of the Company (in such
circumstances, responsibility and hence any
adjustments to the level of vesting may be
allocated collectively or individually to
participants); and
There were no issues that caused material damage to the reputation of the Company.
• that the business has a stable and
appropriate capital structure in place
following the cessation of restrictions on
trade due to the Covid-19 pandemic that
enables the recovery of the business and
execution of the Company’s strategic
priorities.
The Board believes that the business continues to have a stable capital structure.
Therefore, having reviewed each underpin condition, the Committee determined that awards should vest in full.
Long-term incentive awards made during FY 2024
An award for FY 2023/25 was made to the Chief Executive and the Chief Financial Officer in January 2024 in accordance with the rules of the PSP
and within the remuneration policy approved at the January 2024 AGM.
The performance condition has three independent elements: Operating Cashflow (70%); Earnings Per Share (‘EPS’) growth (20%); and a sustainability
measure based on reduction in Scope 1, 2 & 3 emissions (10%).
The Committee undertook a thorough review of the performance measures and targets that will apply and disclosed this in last years report.
For completeness these are summarised in the table below:
FY 2024 – 2026 PSP performance conditions
Weighting (% of
maximum) Threshold Maximum
Operating Cashflow (£m) 70% 1,296 1,368
EPS Growth (% CAGR) 20% 21.4 25.9
Sustainability – reduction in Scope 1, 2 & 3 emissions tCO
2
e 10% -53,619 -53,619
Full details of awards made to Executive Directors under the PSP are set out below (audited by KPMG):
Executive Directors
Nil Cost Options
awarded during
the year to
28/09/24
Basis of award
(% of basic
annual salary)
Award
date
Market price
per share used
to determine
the award
(p)
a
Actual/
planned
vesting date
Latest
lapse date
b
Face value
c
£
Phil Urban 467,307 200 31/1/24 260 Nov 26 Feb 2027 1,215,933
Tim Jones 390,769 200 31/1/24 260 Nov 26 Feb 2027 1,016,781
Total 858,076 2,232,714
a. Market price is the average of the middle market quotations on the three days prior to the award being made.
b. The date on which vested shares will lapse if not exercised.
c. Face value is the maximum number of shares that may vest (excluding any dividend shares that may accrue) multiplied by the middle market quotation of a Mitchells & Butlers
share on the day the award was made (260.2p).
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 105
Governance
Report on Directors’ remuneration continued
All-employee SIP
The table below shows the awards made to Directors under the free share element of the SIP during the year (audited by KPMG).
SIP
Executive Director
Shares
awarded
during
the year
to 28/9/24
Award
date
Market price
per share
at award
(p)
Normal
vesting
date
Market price
per share
at normal
vesting date
(p)
Lapsed
during
period
Phil Urban 862 2/7/24 287 2/7/27 n/a –
Tim Jones 700 2/7/24 287 2/7/27 n/a –
Total 1,562
Directors’ entitlements under the Partnership Share element of the SIP are set out as part of the Directors’ interests table on page 110.
Executive Directors: Implementation of remuneration policy in FY 2025
Fixed Pay (Base Pay, Pensions and Benefits)
The current level of inflation is putting pressure on pay increases. Overall pay increases have been 8.9% over the year with hourly paid frontline
employees who are typically the lowest paid employees in the Group, seeing the largest increases.
With effect from 1 January 2025 Phil Urban’s salary will increase to £625,725 (3%) and Tim Jones’s to £523,250 (3%).
The pension allowance paid to Executive Directors remains at 4%, in line with the general workforce.
There are no changes to the benefits available to Executive Directors.
Annual Bonus
The Committee believes that the annual bonus scheme for FY 2024 was successful in driving the right behaviours across the business and as such has
determined that the annual bonus scheme for FY 2025 will be the same and will be structured as follows:
• The maximum earnings opportunity will remain at 100% of base salary.
• Adjusted Operating Profit will continue to account for 70% of the overall opportunity.
The remaining 30% of the annual bonus plan will be allocated against the business scorecard as follows:
– 15% for Guest Health (reputation.com scores and guest complaints).
– 10% for employee engagement.
– 5% for overall safety performance.
• The non-financial elements will only be payable if a threshold level of financial performance is achieved. For FY 2025 this will be unchanged
at 97.5% of Adjusted Operating Profit.
Targets are not being disclosed on the basis that they are considered commercially sensitive but will be disclosed in next year’s report.
Executive Directors are also aware that the Committee may take into account other factors when assessing if any bonus may be paid as part of our
established quality of earnings assessment. In particular this assessment will review the overall financial performance of the Group over the year
to ensure that any payout resulting from the approach to target setting above, is consistent with overall performance across the year.
Performance Share Plan (‘PSP’) award FY 2025 to FY 2027
A PSP award is due to be made in respect of the 2025–2027 performance period.
The Committee has undertaken a thorough review of the performance measures that will apply and these are summarised in the table below:
2025 – 2027 PSP performance conditions
Weighting (% of
maximum) Threshold Maximum
Operating Cashflow (£m) 70% 1,370 1,448
EPS Growth (% CAGR) 20% 4.1 6.9
Sustainability – reduction in Scope 1, 2 & 3 emissions tCO
2
e 10% -41,891 -41,891
Additional remuneration disclosures
Payment for loss of office
No payments for loss of office were made in the year ended 28 September 2024.
Payments to past Directors
No payments were made to any past Directors in the year ended 28 September 2024.
106 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Total shareholder return from September 2014 to September 2024 (rebased to 100)
This graph shows the value, by 28 September 2024, of £100 invested in Mitchells & Butlers plc on 28 September 2014, compared with the value
of £100 invested in the FTSE 250 and the FTSE All Share Travel and Leisure indices.
250
200
100
150
50
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Mitchells & Butlers plc FTSE 250 FTSE All Share Travel and Leisure Source: Datastream (Thomson Reuters)
CEO earnings history
Year ended 26/09/15 24/09/16 30/09/17 29/09/18 28/09/19 26/09/20 25/9/21 24/9/22 30/9/23 28/09/24
Phil Urban
Single figure remuneration (£000) – 613 770 819 1,684 553 627 810 1,573 1,921.5
Annual bonus outcome (% of max) – – 28 39 82 – – 33 95 100
LTIP vesting outcome (% of max) – – – – 47.5 – – – 100 100
Alistair Darby
Single figure remuneration (£000) 878 – – – – – – –
Annual bonus outcome (% of max) – – – – – – – –
LTIP vesting outcome (% of max) 19.0 – – – – – – –
Pay ratios
The table below sets out the Chief Executive pay ratio at the median, 25th and 75th percentiles for 2024. Data is also presented for 2018 as
Mitchells & Butlers has disclosed the pay ratio between the Chief Executive and the median pay of other employees for the last six years, despite
not needing to comply with this requirement until the 2020 Annual Report.
Chief Executive pay ratio
Financial period Method P25 (lower quartile) P50 (median) P75 (upper quartile)
2024 Option C 92:1 92:1 87:1
2023 Option C 86:1 82:1 78:1
2022 Option C 53:1 47:1 45:1
2021 Option C 41:1 38:1 36:1
2020 Option C 37:1 35:1 35:1
2019 Option C 120:1 112:1 106:1
2018 Option C 61:1 58:1 52:1
The lower quartile, median and upper quartile employees were calculated based on full-time equivalent base pay data as at 28 September 2024.
This calculation methodology was selected as the data was felt to be the most accurate way of identifying the best equivalents of P25, P50 and P75
and, therefore, the most accurate measurement of our pay ratios. Of the three allowable methodologies under the legislation, this method is classed
as ‘Option C’. Option A was considered but given the high levels of team member turnover, it was felt more appropriate to adopt the approach set
out above.
The employee pay data has been reviewed and the Committee is satisfied that it fairly reflects the relevant quartiles given the very large proportion
of hourly paid team members employed by Mitchells & Butlers (c. 85% of the total workforce). The three representative employees used to calculate
the pay ratios are hourly paid and the base pay elements were calculated using a full-time equivalent hourly working week of 35 hours. Hourly paid
employees do not participate in the annual bonus plan or long-term incentive plan and in most cases do not have any taxable benefits. Employee pay
does not include earnings from tips and service charges, from which many employees benefit. The calculations are based on the single figure
methodology and exclude the value of any awards under the free share element of the SIP.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 107
Governance
Report on Directors’ remuneration continued
Pay details for the individuals are set out below:
Chief Executive
(£)
P25 (lower quartile)
(£)
P50 (median)
(£)
P75 (upper quartile)
(£)
Salary 598,731 20,402 20,821 21,148
Total pay 1,919,044 20,826 20,833 21,298
On a total pay basis, the ratio of workforce pay to the Chief Executive’s total pay has increased, reflecting the higher levels of variable pay from
the annual bonus plan and the vesting under the RSP. The Committee believes that the ratio is broadly consistent with that of other organisations in
the hospitality and retail sectors. The overall trend in the median ratio aligns with the movement in the single total figure of remuneration over time.
Hourly-paid employees do not participate in the annual bonus plan, whereas salaried employees do participate in an annual bonus plan (c. 5,450
employees). The median pay ratio is consistent with pay and progression policy for UK employees. More broadly, pay in the hospitality sector is lower
than many other sectors and this will be an influencing factor in the overall pay ratio, despite significant increases in pay rates over the last few years.
Gender Pay Gap
The 2024 mean Gender Pay Gap for the Group is 5.9% (2023, -1.7%) and the median Gender Pay Gap is 1.7% (2023, 0.6%). The mean bonus gap
is 25.5% (2023, 24.3%) and the median bonus gap is 0.0% (2023, 26.3%).
Year-on-year change in remuneration of Directors compared to an average employee
2024 2023 2022 2021
Salary/
Fees Bonus Benefits
Salary/
Fees Bonus Benefits
Salary/
Fees Bonus Benefits
Salary/
Fees Bonus Benefits
Average employee 9.7% 7.0% -4.5% 8.7% 422.3% -6.3% 5.6% 32.2% -14.0% 1.2% 81.6% 6.3%
Executive Directors
Phil Urban 3.0% 8.5% 0.0% 6.5% 202.9% 4.3% 2.2% 100.0% 3.1% 0.00% 0.00% -1.4%
Tim Jones 3.0% 8.4% 2.6% 6.5% 203.0% 2.2% 2.2% 100.0% 5.9% 0.00% 0.00% -3.3%
Non-Executive
Directors
Bob Ivell -0.9% – 16.7% 4.8% – 180.0% 0.0% 0.0% -60.4% 0.0% 0.0% -25.4%
Eddie Irwin -0.9% – – 4.8% – – 0.0% 0.0% 0.0% 0.0% 0.0% 0%
Dave Coplin -0.9% – 36.1% 4.8% – 967.9% 0.0% 0.0% -93.2% 0.0% 0.0% -74.0%
Josh Levy -0.9% – – 4.8% – – 0.0% 0.0% -100.0% 0.0% 0.0% 225.1%
Keith Browne -0.9% – – 4.8% – – 0.0% 0.0% 0.0% 0.0% 0.0% -59.2%
Jane Moriarty -0.9% – 98.2% 8.7% – 197.3% 34.8% 0.0% -54.3% 24.5% 0.0% 443.9%
Amanda Brown -0.9% – – 354.0% – – 100.0% 0.0% 0.0% n/a n/a n/a
Salaries and fees are based on rates at the year end date on a full time equivalent (‘FTE’) basis. Hourly paid employees do not participate in any bonus
scheme and in most cases are not eligible for taxable benefits. The figures shown for these elements are based on the year-on-year change for eligible
employees.
The figures for Executive Directors do not include LTIP awards or pension benefits that are disclosed in the single figure table. The benefit figures for
Non-Executive Directors relate to taxable expenses as detailed in the single figure table on page 109. The small decrease in fees for Non-Executive
Directors in FY 2024 is due to FY 2023 being a 53 week year.
Relative importance of spend on pay £m
Figures shown for wages and salaries consist of all earnings, including bonus. In FY 2024, £3m (0.35%) was paid to Executive and Non-Executive
Directors (2023 £2.9m (0.36%)).
-87.5%
-1.0%
852 199 201795 127 143
1
8
1,000
200
400
0
600
800
FY 2024 FY 2023
* From note 2.3 to the consolidated financial statements. ** Business Rates, Corporation Tax, Employer’s NI.
There were no shareholder dividends or share buybacks in FY 2023.
Wages and salaries* Principal taxes** Pension deficit contributions Debt service
+7.2%
-11.2%
108 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Fees for external directorships
No external non-executive directorships were held by either Executive Director during the year to 28 September 2024.
Chair and Non-Executive Directors
Non-Executive Directors (audited by KPMG)
The table below set out the single figure remuneration received by the Non-Executive Directors during the reporting year and prior year.
Fees
£000
Taxable
benefits
a
£000
Short-term
incentives
£000
Pension-
related benefits
£000
Long-term
incentives
£000
Other
£000
Total
remuneration
£000
Total
fixed pay
£000
Total
variable pay
£000
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
FY
2024
FY
2023
Bob Ivell 295 298 2 2 – – – – – – – – 297 300 297 300 – –
Eddie Irwin 55 55 – – – – – – – – – – 55 55 55 55 – –
Josh Levy 55 55 0.5 0.5 – – – – – – – – 55.5 55.5 55.5 55.5 – –
Dave Coplin 68 69 1 0.5 – – – – – – – – 69 69.5 69 69.5 – –
Keith Browne 55 55 – – – – – – – – – – 55 55 55 55 – –
Jane Moriarty 82 83 3 1 – – – – – – – – 85 84 85 84 – –
Amanda Brown 68 69 1 1 – – – – – – – – 69 70 69 70 – –
Sub-total
Non-Executive
Directors
678 684 7.5 5 – – – – – – – – 685.5 689 685.5 689 – –
Total Executive
Directors and
Non-Executive
Directors
1,778 1,751 38.5 36 1,100 1,014 48 74 1,249 716 4.5 5 4,218 3,596 1,869 1,866 2,349 1,730
a. Taxable benefits for Non-Executive Directors include cash payments made or accounted for by the Company relating to the reimbursement of expenses (and the value
of personal tax on those expenses).
Non-Executive Directors: Implementation of remuneration policy in FY 2025
The Chair’s fee and those of the Non Executive Directors were increased in January 2022. No increase will apply in 2025.
Directors’ shareholdings and share interests
PRSP, RSP, PSP, STDIP and SAYE
The table below sets out details of the Executive Directors’ outstanding awards under the PRSP, RSP, PSP, STDIP and Sharesave (‘SAYE’)
(audited by KPMG).
Executive Director Scheme
Number of
shares at
30 September
2023
Granted
during the
period
Lapsed
during the
period
Exercised
during the
period
Number of
shares at
28 September
2024
Phil Urban PRSP 89,483 – 89,483 – –
RSP 813,107 – – 173,807 639,300
PSP – 467,307 – – 467,307
STDIP 68,152 121,496 – 34,076 155,572
SAYE 7,031 – – – 7,031
Total 977,773 588,803 89,483 207,883 1,269,210
Tim Jones PRSP 52,382 – 52,382 – –
RSP 680,332 – – 145,407 534,925
PSP – 390,769 – – 390,769
STDIP 57,027 101,677 – 28,514 130,190
SAYE – – – – –
Total 789,741 492,446 52,382 173,921 1,055,884
Gains made by the Executive Directors in relation to share options during FY 2024 were nil.
Directors’ interests
Executive Directors are expected to hold Mitchells & Butlers shares in line with the shareholding guideline set out in the approved remuneration policy.
This requires the Chief Executive to accumulate Mitchells & Butlers shares to the value of a minimum of 250% of salary (200% of salary for the
CFO) through the retention of shares arising from share schemes (on a net of tax basis) or through market purchases. Phil Urban’s shareholding at
28 September 2024 was 246% of his basic annual salary (2023 148%) and as a result Phil Urban has not met the shareholding guideline at this time.
Tim Jones’s shareholding was 229% of his basic annual salary (2023 133%) and as a result Tim Jones has met the shareholding guideline.
Shareholdings are calculated based on the average share price over the final three months of the financial period; for FY 2024 this was 299.7p
(FY 2023 219.8p). In line with the remuneration policy, no shares can be sold until the guideline is met and post-cessation holding requirements
are in place.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 109
Governance
Report on Directors’ remuneration continued
The interests of the Directors in the ordinary shares of the Company as at 30 September 2023 and 28 September 2024 are as set out below (audited
by KPMG):
Wholly-owned shares
without performance
conditions
a
Unvested
shares with
performance
conditions
Unvested shares without
performance conditions
b
Unvested options
without performance
conditions
c
Unvested options
with performance
conditions/underpins
d
Vested but
unexercised
options
Total
shares/options
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
Executive
Directors
Phil Urban
499,599 388,139 – – 155,572 68,152 7,031 7,031 1,106,607 902,590 – – 1,768,809 1,365,912
Tim Jones 387,597 294,259 – – 130,180 57,027 – – 925,694 732,714 – – 1,443,471 1,084,000
Non-
Executive
Directors
Bob Ivell
17,222 17,222 – – – – – – – – – – 17,222 17,222
Eddie Irwin 43,833 43,833 – – – – – – – – – – 43,833 43,833
Dave Coplin 6,000 6,000 – – – – – – – – – – 6,000 6,000
Josh Levy – – – – – – – – – – – – – –
Keith Browne – – – – – – – – – – – – – –
Jane Moriarty – – – – – – – – – – – – – –
Amanda Brown – – – – – – – – – – – – –
Total 954,251 749,453 – – 285,752 125,179 7,031 7,031 2,032,301 1,635,304 – – 3,279,335 2,516,967
a. Includes Free Shares and Partnership Shares granted under the SIP.
b. Deferred bonus awards granted under the STDIP.
c. Options granted under the Sharesave as detailed in the table on page 109.
d. Options granted under the RSP or PSP as detailed in the table on page 109.
Directors’ shareholdings (shares without performance conditions) include shares held by persons closely associated with them.
The above shareholdings are beneficial interests and are inclusive of Directors’ holdings under the Share Incentive Plan (both Free Share and
Partnership Share elements).
Phil Urban and Tim Jones acquired 107 and 108 shares respectively under the Partnership Share element of the Share Incentive Plan between the end of
the financial period and 26 November 2024. There have been no changes in the holdings of any other Directors since the end of the financial period.
None of the Directors has a beneficial interest in the shares of any subsidiary or in debenture stocks of the Company or any subsidiary.
The market price per share on 28 September 2024 was 302p and the range during the year to 28 September 2024 was 199p to 317p per share.
The Executive Directors as a group beneficially own 0.1% of the Company’s shares.
Service contracts and Letters of Appointment
Executive Directors
Details of the service contracts of Executive Directors are set out below.
Director Contract start date Unexpired term
Notice period
from Company
Minimum notice
period from Director
Compensation on
change of control
Phil Urban
a
27/09/15 Indefinite 12 months 6 months No
Tim Jones 18/10/10 Indefinite 12 months 6 months No
a. Phil Urban became Chief Executive and joined the Board on 27 September 2015. His continuous service date started on 5 January 2015, the date on which he joined the
Company as Chief Operating Officer.
110 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Non-Executive Directors
Non-Executive Directors, including the Company Chair, do not have
service contracts but serve under letters of appointment which provide
that they are initially appointed until the next AGM when they are
required to stand for election. In line with the Company’s Articles of
Association, all Directors, including Non-Executive Directors, will stand
for re-election at the 2025 AGM. This is also in line with the provisions of
the 2018 UK Corporate Governance Code. Non-Executive Directors’
appointments are terminable without notice and with no entitlement to
compensation. Payment of fees will cease immediately on termination.
Copies of the individual letters of appointment for Non-Executive
Directors and the service contracts for Executive Directors are available
at the registered office of the Company during normal business hours
and on our website. Copies will also be available to shareholders to view
at the 2025 AGM.
Mitchells & Butlers Remuneration Committee
Committee terms of reference
The Committee’s terms of reference were reviewed and updated in 2019
to take account of the 2018 UK Corporate Governance Code.
The Committee’s main responsibilities include:
• determining and making recommendations to the Board on the
Company’s Executive remuneration policy and its cost;
• taking account of all factors necessary when determining the
remuneration policy, the objective of which is to ensure that the policy
promotes the long-term success of the Company;
• determining the individual remuneration packages of the Executive
Directors and other senior Executives (including the Group General
Counsel and Company Secretary and all direct reports to the Chief
Executive) and, in discussion with the Executive Directors, the
Company Chair;
• having regard to the pay and employment conditions across
the Company when setting the remuneration of individuals under
the remit of the Committee; and
• aligning Executive Directors’ interests with those of shareholders by
providing the potential to earn significant rewards where significant
shareholder value has been delivered.
Committee membership and operation
Committee members and their respective appointment dates are
detailed in the table below.
Name
Date of appointment to
the Committee
Amanda Brown
a
4 July 2022
Bob Ivell 11 July 2013
Dave Coplin
a
29 February 2016
Josh Levy 20 July 2017
Jane Moriarty
a
27 February 2019
a. Independent Non-Executive Directors.
Committee activity during the year
During the year the Committee met four times.
Key remuneration items considered over the year were as follows:
October 2023 Remuneration Policy
Annual Bonus Targets
Salary Reviews
PSP Targets
November 2023 Remuneration Policy
2023 Bonus – Confirmation of outcome
2021 RSP Vesting outcome
Final approval of PSP Targets
Divisional Directors’ FY 2024 bonus
April 2024 Employee Update
All Employee Share Schemes approval
Governance Update
September 2024 2025 Annual Bonus Plan structure
Executive Pay Benchmarking
Employee engagement
Advice to the Committee
The Committee received advice from PwC LLP (‘PwC’) during the year.
PwC were appointed following a competitive tender process during
2018. PwC are signatories to the Remuneration Consultants Group Code
of Conduct and any advice received is governed by that Code. Total fees
payable in respect of remuneration advice to the Committee in the
reporting year totalled £38,000
b
and were charged on a time and
materials basis.
Advice was also received from the Company’s legal advisers, Freshfields
Bruckhaus Deringer LLP, on the operation of the Company’s employee
share schemes and on corporate governance matters. Clifford Chance
LLP also provided advice in relation to pension schemes.
The Committee is satisfied that the advice received from its advisers was
objective and independent and that the PwC engagement partner and
the team that provide remuneration advice to the Committee do not have
any connections that may impair their independence.
Members of management including Susan Martindale, the Group HR
Director, and Craig Provett, the Director of Compensation and Benefits,
are invited to attend meetings on remuneration matters where appropriate.
They are not present when matters affecting their own remuneration
arrangements are discussed. The Company Chair does not attend Board
or Committee meetings when his remuneration is under review.
Phil Urban and Tim Jones were present at meetings where the Company’s
long-term and short-term incentive arrangements and share schemes
were discussed. However, each declared an interest in the matters under
review and did not vote on their own arrangements.
b. Fees are shown net of VAT. 20% VAT was paid on the advisers’ fees shown above.
Strategic Report Financial Statements Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 111
Governance
Report on Directors’ remuneration continued
Previous AGM voting outcomes
At the last AGM (held on 23 January 2024), a resolution on the annual report on remuneration was subject to an advisory vote.
The table below sets out details of this advisory vote at the 2024 AGM, and also the outcome of the vote on our remuneration policy at the 2024 AGM:
Votes cast Votes for
a
% Votes against % Votes withheld
b
Approval of annual report on remuneration 535,078,717 530,322,991 99.11 4,755,726 0.89 45,033
Approval of remuneration policy at 2024 AGM 535,062,052 509,875,972 95.29 25,186,080 4.71 61,730
a. The ‘For’ vote includes those giving the Company Chair discretion.
b. A vote withheld is not a vote in law and is not counted in the calculation of the votes ‘For’ or ‘Against’ the resolution.
Votes ‘For’ and ‘Against’ are expressed as a percentage of votes cast.
The Board was pleased with the very high levels of support for both the new policy and the annual report on remuneration.
The Directors’ Remuneration Report has been approved by the Board of Mitchells & Butlers plc.
Amanda Brown
Chair of the Remuneration Committee
26 November 2024
112 Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Details the financial performance of
the Group in FY 2024 in comparison
to its performance in prior years.
Financial Statements
In this section
114 Independent auditor’s report to the
members of Mitchells & Butlers plc
122 Group income statement
123 Group statement of comprehensive
income
124 Group balance sheet
125 Group statement of changes in equity
126 Group cash flow statement
Notes to the consolidated financial
statements
127 Section 1 – Basis of preparation
130 Section 2 – Results for the period
130 2.1 Segmental analysis
130 2.2 Separately disclosed items
131 2.3 Revenue and operating costs
134 2.4 Taxation
137 2.5 Earnings per share
138 Section 3 – Operating assets and liabilities
140 3.1 Property, plant and equipment
143 3.2 Leases
147 3.3 Impairment
148 3.4 Working capital
150 3.5 Provisions
151 3.6 Goodwill and other intangible
assets
153 3.7 Associates
154 Section 4 – Capital structure and
financing costs
154 4.1 Borrowings
156 4.2 Finance costs and income
156 4.3 Financial instruments
165 4.4 Net debt
167 4.5 Pensions
172 4.6 Share-based payments
174 4.7 Equity
176 Section 5 – Other notes
176 5.1 Acquisitions
177 5.2 Related party transactions
178 5.3 Subsidiaries and associates
180 Mitchells & Butlers plc Company
financial statements
182 Notes to the Mitchells & Butlers plc
Company financial statements
52 weeks ended 28 September 2024
Financial Statements
Mitchells & Butlers plc Annual Report and Accounts 2024 113
Other InformationGovernance
Introduction
Strategic Report
Independent auditor’s report to the
members of Mitchells & Butlers plc
1. Our opinion is unmodified
We have audited the financial statements of Mitchells & Butlers plc
(“the Company”) for the 52 week period ended 28 September 2024
which comprise the Group Income Statement, the Group Statement of
Comprehensive Income, the Group and Company Balance Sheets, the
Group and Company Statements of Changes in Equity, the Group cash
flow statement and the related notes, including the accounting policies
within notes 1 to 5.3 of the Group financial statements and notes 1 to 10
of the Company financial statements.
In our opinion:
• the financial statements give a true and fair view of the state of the
Group’s and of the parent Company’s affairs as at 28 September
2024 and of the Group’s profit for the 52 week period then ended;
• the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
• the parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit evidence we have obtained is
a sufficient and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the audit committee.
We were first appointed as auditor by the shareholders on 25 January
2022. The period of total uninterrupted engagement is for the 3 financial
periods ended 28 September 2024. We have fulfilled our ethical
responsibilities under, and we remain independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
Overview
Materiality:
Group financial
statements as a whole
£24m (2023:£23m)
0.46% (2023: 0.48%) of total assets
Coverage 94% (2023:82%) of Group profit
before tax
92% (2023: 91%) of Group Total
assets
Key audit matters vs 2023
Recurring risks Valuation of the freehold and
long leasehold restaurant and
pub estate
Recoverability of parent
Company investment in
subsidiaries
114 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include
the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below
the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to
address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results
are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming
our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
The risk Our response
Valuation of the
freehold and long
leasehold restaurant
and pub estate
(£4,260 million; 2023:
£3,933 million)
Refer to page 90
(Audit Committee Report)
and pages 140–142 (of the
financial disclosures).
Subjective estimate
The Group holds its freehold
and long leasehold property
estate at fair value, with a
revaluation taking place as at
each balance sheet date. We
determined that the valuation
of the Group’s property estate
is a major source of estimation
uncertainty.
The valuation involves the
determination of estimates,
most notably the fair
maintainable trade (FMT) and
applicable trading multiples by
brand and location.
These estimations are
inherently subjective and small
changes in the assumptions
used to value the Group’s
estate could have a potential
range of reasonable outcomes
greater than our materiality for
the financial statements as a
whole and possibly many
times that amount. The
financial statements (note 3.1)
disclose the sensitivity
estimated by the Group.
Business risks related to audit
risks include:
• Economic environment
(cost inflation) and
consumer changes (post
COVID-19 demographic
changes) have led to
increased uncertainty of
future performance based
on historic trends.
• Capital market sentiment of
the sector remains in
recovery and the sector has
been trading below its
historical levels, leading to a
deficit between market
capitalisation and asset
carrying value of the Group
as a whole.
We performed the tests below rather than seeking to rely on any of the Group’s
controls because the nature of the balance is such that we would expect to obtain
audit evidence primarily through the detailed procedures described.
Our procedures included:
Assessing valuation approach:
We met with the Group’s external valuers and the relevant Group management to
critically assess the valuation assumptions and methodology used in valuing the
properties and the market evidence used by the valuers to support their
assumptions. We also obtained an understanding of the relevant Group
management’s involvement in the valuation process to assess whether appropriate
oversight had occurred.
Assessing valuer’s credentials:
We critically assessed the independence, professional qualification, competence
and experience of the internal and external valuers engaged by the Group.
Sensitivity analysis:
We considered sensitivities to the overall valuation from changes to fair maintainable
trade and to valuation multiples.
Benchmarking assumptions:
We challenged the key assumption (being FMT and multiple), with the assistance of
our own valuation specialists, for a sample of properties by making a comparison to
market comparable data.
Comparing assumptions
We compared the sum of discounted cash flows to the Group’s market capitalisation
to assess the reasonableness of those cash flows which were consistent with those
used to help inform our assessment of FMT.
Assessing inputs:
We agreed observable inputs used for a sample of assets in the valuation to source
documentation.
Assessing outputs:
We evaluated and challenged the output of the valuations through the identification
of higher risk assets with the assistance of our own valuation specialists by
comparing to similar asset performance.
Assessing transparency:
We critically assessed the adequacy of the Group’s disclosures in relation to the
valuation of the estate and the sensitivity of changes in key assumptions.
Our results:
We found the valuation of the freehold and long leasehold restaurant and pub estate
to be acceptable (2023: acceptable).
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 115
Financial Statements
2. Key audit matters: our assessment of risks of material misstatement continued
The risk Our response
Recoverability of
parent Company’s
investment in
subsidiaries
(£1,966 million; 2023:
£1,866 million)
Refer to note 5 on page
184 of the financial
disclosures.
Low risk high value
The carrying amount of the
parent Company’s
investments in subsidiaries
represents 71% (2023: 74%) of
the Company’s total assets.
Their recoverability is not a
high risk of misstatement or
subject to significant
judgement. However, due to
their materiality in the context
of the parent Company
financial statements, this is
considered to be the area that
had the greatest effect on our
overall parent Company audit.
We performed the tests below rather than seeking to rely on any of the parent
Company’s controls because the nature of the balance is such that we would expect
to obtain audit evidence primarily through the detailed procedures described.
Our procedures included:
Test of detail:
We compared the carrying amount of all investments with the relevant subsidiaries’
draft balance sheet to identify whether their net assets, being an approximation of
their minimum recoverable amount, are in excess of their carrying amount and
assess whether those subsidiaries have historically been profit-making.
Comparing valuations:
For the investments where the carrying amount exceeds the net asset value, we
compared the carrying amount of the investment to the directors’ assessment of
value in use.
Benchmarking assumptions:
We assessed and challenged the key assumptions in the value in use calculations
through comparison to industry forecasts and other externally derived data. We
compared the sum of the discounted cash flows to the Group’s market capitalisation
and Group’s net assets to assess the reasonableness of those cash flows.
Our results:
We found the parent Company’s conclusion that there is no impairment of its
investments in subsidiaries to be acceptable (2023: acceptable).
We continue to perform procedures over going concern. However, given the Company’s trading performance, we consider the risk of material
uncertainty to be remote and hence we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not
separately identified in our report this year.
Independent auditor’s report to the members of Mitchells & Butlers plc continued
116 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
3. Our application of materiality and an overview of the
scope of our audit
Materiality for the Group financial statements as a whole was set at
£24 million (2023: £23 million), determined with reference to a
benchmark of total assets, of which it represents 0.46% (2023: 0.48%)
which we consider to be appropriate given the sector in which the entity
operates; the majority of total asset value is in the pub estate and these
assets act as security for the Group’s securitised borrowings and will
therefore be a focus of users of the accounts.
Materiality for the parent Company financial statements as a whole was
set at £18.7 million (2023: £18.7 million), determined with reference to a
benchmark of parent Company total assets, of which it represents 0.68%
(2023: 0.74%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold,
performance materiality, so as to reduce to an acceptable level the risk
that individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a whole.
Performance materiality was set at 75% (2023: 75%) of materiality for the
financial statements as a whole, which equates to £18 million (2023:
£17.2 million) for the Group and £14 million (2023: £13.8 million) for the
parent Company. We applied this percentage in our determination of
performance materiality because we did not identify any factors
indicating an elevated level of risk.
In addition, we applied materiality of £17 million, to Group revenue and
cash and cash equivalents (2023: £16.4 million to Group revenue), for
which we believe misstatement of lesser amounts than materiality for the
financial statements as a whole could reasonably be expected to
influence the Company’s members’ assessment of the financial
performance of the Group.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £1.2 million (2023:
£1.15 million), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Of the Group’s 6 (2023: 6) reporting components, we subjected 5 (2023:
5) to full scope audits for group purposes and 1 (2023: 1) to specified
risk-focused audit procedures. The latter were not individually financially
significant enough to require a full scope audit for group purposes, but
did present specific individual risks that needed to be addressed. We
conducted reviews of financial information (including enquiry) at a
further 42 (2023: 41) non-significant components as these components
are not quantitively or qualitatively significant.
The components within the scope of our work accounted for the
percentages illustrated below.
We subjected 1 (2023: 1) components to specified risk-focused audit
procedures over borrowings, derivative financial instruments, cash and
cash equivalents, deferred tax asset, finance costs, finance income and
cash flow hedges.
For the residual components, we performed analysis at an aggregated
group level to re-examine our assessment that there were no significant
risks of material misstatement within these.
The scope of the audit work performed was predominately substantive
as we placed limited reliance upon the Group’s internal control over
financial reporting.
Group materiality
£24 million
(2023: £23 million)
£24m
Whole financial statements
materiality (2023: £23m)
£18m
Whole financial statements
performance materiality
(2023: £17.2m)
£21.6m
Range of materiality at 5
components (£12m–£21.6m)
(2023: £11.5m–£20.7m)
£1.2m
Misstatements reported to the
audit committee (2023:
£1.15m)
Group total assets
£5,245 million
(2023: £4.802 million)
Group materiality
Group total assets
Full scope for group audit purposes 2024
Specified risk-focused audit procedures 2024
Full scope for group audit purposes 2023
Specified risk-focused audit procedures 2023
Residual components
(2023: 94%)
87%
68%
7%
6%
93%
6%
26%
Group total assets
(2023: 82%)
Full scope for group audit purposes 2024
Specified risk-focused audit procedures 2024
Full scope for group audit purposes 2023
Specified risk-focused audit procedures 2023
Residual components
84%
55%
10%
6%
94%
18%
27%
Group profits before tax
(2023: 94%)
Full scope for group audit purposes 2024
Specified risk-focused audit procedures 2024
Full scope for group audit purposes 2023
Specified risk-focused audit procedures 2023
Residual components
88%
88%
7%
5%
95%
8%
4%
Group revenue
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 117
Financial Statements
4. The impact of climate change in our audit
In planning our audit, we considered the potential impacts of climate
change on the Group’s business and its financial statements.
The Group has set out its target to achieve zero greenhouse gas
emissions by 2040, for Scope 1, 2 & 3 emissions, zero operation waste
to landfill by 2030 and to reduce food waste by 50% by 2030 (from FY
2019 baselines).
However, whilst the Group has set targets to be carbon neutral by 2050,
the consequences, in terms of investment, of the gross cost of this
transition, how the demand might be impacted by the price increases
needed to recover these costs and the longer term changes in customer
behaviour are still being assessed, as the Group considers how it will
work towards meeting these targets.
As part of our audit we have performed a risk assessment, including
making enquiries of management, reading board meeting minutes and
applying our knowledge of the Group and sector in which it operates to
understand the extent of the potential impact of climate change risk on
the Group’s financial statements. Taking into account the nature of the
business, we have not assessed climate related risk to be significant to
our audit this financial year. There was no impact on our key audit
matters.
We also read the Group’s disclosure of climate related information in the
front half of the annual report and considered consistency with the
financial statements and our knowledge gained from our financial
statement audit work.
5. Going concern
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded that
the Group’s and the Company’s financial position means that this is
realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability to
continue as a going concern for at least 12 months from the date of
approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s financial
resources or ability to continue operations over the going concern
period. The risks that we considered most likely to adversely affect the
Group’s available financial resources and metrics relevant to debt
covenants over this period were:
• Maintenance of sales growth in the face of pressure on consumer
spending power
• Future outlook for cost inflation specifically in food costs, drink costs,
energy prices and wages and salaries.
We also considered less predictable but realistic second order impacts,
such as global political developments, supply chain disruptions and
government policy that could affect demand in the Group’s markets.
We considered whether these risks could plausibly affect the liquidity
and covenant compliance in the going concern period by assessing the
directors’ sensitivities over the level of available financial resources and
covenant thresholds indicated by the Group’s financial forecasts taking
account of severe, but plausible adverse effects that could arise from
these risks individually and collectively.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate;
• we have not identified, and concur with the directors’ assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the
Group’s or Company’s ability to continue as a going concern for the
going concern period;
• we have nothing material to add or draw attention to in relation to the
directors’ statement in note 1 to the financial statements on the use of
the going concern basis of accounting with no material uncertainties
that may cast significant doubt over the Group and Company’s use of
that basis for the going concern period, and we found the going
concern disclosure in note 1 to be acceptable; and
• the related statement under the Listing Rules set out on page 53 is
materially consistent with the financial statements and our audit
knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the above
conclusions are not a guarantee that the Group or the Company will
continue in operation.
6. Fraud and breaches of laws and regulations – ability
to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (‘fraud risks’)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and
inspection of policy documentation as to the Group’s and parent
Company’s high-level policies and procedures to prevent and detect
fraud, including the internal audit function, and the Group’s and
parent Company’s channels for ‘whistleblowing’, as well as whether
they have knowledge of any actual, suspected or alleged fraud.
• Reading Board, audit committee, risk and remuneration committee
meeting minutes.
• Considering remuneration incentive schemes and performance
targets for directors and other management.
• Using analytical procedures to identify any unusual or unexpected
relationships.
• Considering the existence of any significant unusual transactions.
We communicated identified fraud risks throughout the audit team and
remained alert to any indications of fraud throughout the audit.
Independent auditor’s report to the members of Mitchells & Butlers plc continued
118 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
As required by auditing standards, and taking into account possible
pressures to meet profit targets, our overall knowledge of the control
environment, we perform procedures to address the risk of management
override of controls, in particular the risk that Group and component
management may be in a position to make inappropriate accounting
entries and the risk of bias in accounting estimates and judgements such
as the valuation of the estate and impairment assumptions. On this audit
we do not believe there is a fraud risk related to revenue recognition
because Group revenue is generated predominantly through the
operation of pubs. This revenue contains no significant judgements and
is comprised of a large number of small, simple transactions that are
received in cash or credit card receivables at the point of sale. Therefore
there is limited opportunity for management to manipulate or to
fraudulently post the volume of transactions that would be required to
have a material impact on revenue.
We did not identify any additional fraud risks.
We performed procedures including:
• Identifying journal entries and other adjustments to test for all full
scope components based on risk criteria and comparing the identified
entries to supporting documentation. These included those posted
by senior finance management/those posted to unusual accounts
related to revenue, cash and borrowings, operating costs/other
expenses, seldom used accounts and those that move costs out
of EBITDA.
• Evaluated the business purpose of significant unusual transactions.
• Assessed whether the judgements made in making accounting
estimates are indicative of a potential bias.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from our
general commercial and sector experience, and through discussion with
the directors and other management (as required by auditing standards),
and from inspection of the Group’s regulatory and legal correspondence
and discussed with the directors and other management the policies and
procedures regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our team
and remained alert to any indications of non- compliance throughout
the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation (including
related companies legislation), distributable profits legislation, pension
legislation and taxation legislation and we assessed the extent of
compliance with these laws and regulations as part of our procedures
on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where
the consequences of non-compliance could have a material effect on
amounts or disclosures in the financial statements, for instance through
the imposition of fines or litigation or the loss of the Group’s licence to
operate. We identified the following areas as those most likely to have
such an effect: licensing regulations, responsible drinking regulations,
planning and building legislation, health and safety, data protection laws,
anti-bribery, employment law, recognising the nature of the Group’s
activities. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the directors and other management and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
We discussed with the audit committee matters related to actual or
suspected breaches of laws or regulations, for which disclosure is not
necessary, and considered any implications for our audit.
Context of the ability of the audit to detect fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the
financial statements, even though we have properly planned and
performed our audit in accordance with auditing standards. For
example, the further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial statements,
the less likely the inherently limited procedures required by auditing
standards would identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as these may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal controls. Our
audit procedures are designed to detect material misstatement. We are
not responsible for preventing non-compliance or fraud and cannot be
expected to detect non-compliance with all laws and regulations.
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 119
Financial Statements
7. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information presented in the
Annual Report together with the financial statements. Our opinion on
the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly
stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report
and the directors’ report;
• in our opinion the information given in those reports for the financial
year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with
the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect of
emerging and principal risks and the viability statement, and the financial
statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw
attention to in relation to:
• the directors’ confirmation on page 86 that they have carried out a
robust assessment of the emerging and principal risks facing the
Group, including those that would threaten its business model, future
performance, solvency and liquidity;
• the Risks and Uncertainties disclosures describing these risks and
how emerging risks are identified, and explaining how they are being
managed and mitigated; and
• the directors’ explanation in the viability statement of how they have
assessed the prospects of the Group, over what period they have
done so and why they considered that period to be appropriate, and
their statement as to whether they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary qualifications
or assumptions.
We are also required to review the viability statement, set out on page 53
under the Listing Rules. Based on the above procedures, we have
concluded that the above disclosures are materially consistent with the
financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the
knowledge acquired during our financial statements audit. As we cannot
predict all future events or conditions and as subsequent events may
result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of anything to
report on these statements is not a guarantee as to the Group’s and
Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and our
audit knowledge:
• the directors’ statement that they consider that the annual report and
financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
• the section of the annual report describing the work of the Audit
Committee, including the significant issues that the audit committee
considered in relation to the financial statements, and how these
issues were addressed; and
• the section of the annual report that describes the review of the
effectiveness of the Group’s risk management and internal control
systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions of the
UK Corporate Governance Code specified by the Listing Rules for our
review. We have nothing to report in this respect.
8. We have nothing to report on the other matters on which
we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require
for our audit.
We have nothing to report in these respects.
Independent auditor’s report to the members of Mitchells & Butlers plc continued
120 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 74, the
directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal
control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether
due to fraud or error; assessing the Group and parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related
to going concern; and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an
annual financial report prepared under Disclosure Guidance and
Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report provides no
assurance over whether the annual financial report has been prepared in
accordance with those requirements.
10. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work,
for this report, or for the opinions we have formed.
Simon Haydn-Jones
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
One Snowhill
Snowhill Queensway
Birmingham
B4 6GH
26 November 2024
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 121
Financial Statements
| 2024 | 2023 | ||||||
| 52 weeks | 53 weeks | ||||||
| Before | Before | ||||||
| separately | Separately | separately | Separately | ||||
| disclosed | disclosed | disclosed | disclosed | ||||
| items | items a | Total | items | items a | Total | ||
| Notes | £m | £m | £m | £m | £m | £m | |
Revenue | 2.1, 2.3 | ||||||
Operating costs before depreciation, amortisation and movements in the valuation of the property portfolio | 2.2, 2.3 | ( | ( | ( | ( | ||
Share in associates’ results | 3.7 | ||||||
Net profit arising on property disposals | 2.2, 2.3 | ||||||
EBITDA b before movements in the valuation of the property portfolio | |||||||
| Depreciation, amortisation and movements | |||||||
in the valuation of the property portfolio | 2.2, 2.3 | ( | ( | ( | ( | ( | ( |
Operating profit/(loss) | ( | ( | |||||
Finance costs | 4.2 | ( | ( | ( | ( | ||
Finance income | 4.2 | ||||||
Net pensions finance charge | 4.2, 4.5 | ( | ( | ( | ( | ||
Profit/(loss) before tax | ( | ( | ( | ||||
Tax (charge)/credit | 2.2, 2.4 | ( | ( | ( | |||
Profit/(loss) for the period | ( | ( | ( | ||||
| Earnings/(loss) per ordinary share | |||||||
– Basic | 2.5 | ( | |||||
– Diluted | 2.5 | ( |
a. Separately disclosed items are explained and analysed in note 2.2.
b. Earnings before interest, tax, depreciation, amortisation and movements in the valuation of the property portfolio. The Directors use a number of alternative performance
measures (APMs) that are considered critical to aid the understanding of the Group’s performance. Key measures are explained on pages 186 to 189 of this Report.
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
All results relate to continuing operations.
Group income statement
For the 52 weeks ended 28 September 2024
122 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Group statement of comprehensive income
For the 52 weeks ended 28 September 2024
| 2024 | 2023 | ||
| 52 weeks | 53 weeks | ||
| Notes | £m | £m | |
Profit/(loss) for the period | ( | ||
| Items that will not be reclassified subsequently to profit or loss: | |||
Unrealised gain/(loss) on revaluation of the property portfolio | 3.1 | ( | |
Remeasurement of pension liability | 4.5 | ||
Tax relating to items not reclassified | 2.4 | ( | |
( | |||
| Items that may be reclassified subsequently to profit or loss: | |||
Exchange differences on translation of foreign operations | ( | ||
| Cash flow hedges: | |||
– (Losses) arising during the period | 4.3 | ( | ( |
– Reclassification adjustments for items included in profit or loss | 4.3 | ||
Tax relating to items that may be reclassified | 2.4 | ( | |
( | |||
Other comprehensive income/(expense) after tax | ( | ||
Total comprehensive income/(expense) for the period | ( |
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 123
Financial Statements
| 2024 | 2023 | ||
| Notes | £m | £m | |
| Assets | |||
Goodwill and other intangible assets | 3.6 | ||
Property, plant and equipment | 3.1 | ||
Right-of-use assets | 3.2 | ||
Finance lease receivables | 3.2 | ||
Other receivables | 3.4 | ||
Pension surplus | 4.5 | ||
Deferred tax asset | 2.4 | ||
Derivative financial instruments | 4.3 | ||
Total non-current assets | |||
Inventories | 3.4 | ||
Trade and other receivables | 3.4 | ||
Finance lease receivables | 3.2 | ||
Derivative financial instruments | 4.3 | ||
Cash and cash equivalents | 4.4 | ||
Total current assets | |||
Total assets | |||
| Liabilities | |||
Pension liabilities | 4.5 | ( | ( |
Trade and other payables | 3.4 | ( | ( |
Current tax liabilities | ( | ( | |
Borrowings | 4.1 | ( | ( |
Lease liabilities | 3.2 | ( | ( |
Derivative financial instruments | 4.3 | ( | |
Total current liabilities | ( | ( | |
Pension liabilities | 4.5 | ( | ( |
Other payables | 3.4 | ( | |
Borrowings | 4.1 | ( | ( |
Lease liabilities | 3.2 | ( | ( |
Derivative financial instruments | 4.3 | ( | ( |
Deferred tax liabilities | 2.4 | ( | ( |
Provisions | 3.5 | ( | ( |
Total non-current liabilities | ( | ( | |
Total liabilities | ( | ( | |
Net assets | |||
| Equity | |||
Called up share capital | 4.7 | ||
Share premium account | 4.7 | ||
Capital redemption reserve | 4.7 | ||
Revaluation reserve | 4.7 | ||
Own shares held | 4.7 | ( | ( |
Hedging reserve | 4.7 | ( | ( |
Translation reserve | 4.7 | ||
Retained earnings | |||
Total equity |
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
Group balance sheet
28 September 2024
124 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Group statement of changes in equity
For the 52 weeks ended 28 September 2024
| Called | Share | Capital | Own | ||||||
| up share | premium | redemption | Revaluation | shares | Hedging | Translation | Retained | Total | |
| capital | account | reserve | reserve | held | reserve | reserve | earnings | equity | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 24 September 2022 | ( | ( | |||||||
Loss for the period | ( | ( | |||||||
Other comprehensive (expense)/income | ( | ( | ( | ||||||
Total comprehensive (expense)/income | ( | ( | ( | ||||||
Credit in respect of share-based payments | |||||||||
At 30 September 2023 | ( | ( | |||||||
Profit for the period | |||||||||
Other comprehensive income/(expense) | ( | ||||||||
Total comprehensive income/(expense) | ( | ||||||||
Purchase of shares | ( | ( | |||||||
Release of shares | ( | ||||||||
Credit in respect of share-based payments | |||||||||
Tax on share-based payment | |||||||||
At 28 September 2024 | ( | ( |
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 125
Financial Statements
| 2024 | 2023 | ||
| 52 weeks | 53 weeks | ||
| Notes | £m | £m | |
| Cash flow from operations | |||
Operating profit | |||
| Add back/(deduct): | |||
Movement in the valuation of the property portfolio | 2.2 | ||
Net profit arising on property disposals | 2.2 | ( | ( |
Loss on disposal of fixtures, fittings and equipment | |||
Depreciation of property, plant and equipment | 2.3 | ||
Amortisation of intangibles | 2.3 | ||
Depreciation of right-of-use assets | 2.3 | ||
Cost charged in respect of share-based payments | 4.6 | ||
Administrative pension costs | 4.5 | ||
Share of associates results | 3.7 | ( | |
Settlement of pre existing lease contracts | 2.2 | ||
Fair value gain on associate | 2.2 | ( | |
Operating cash flow before movements in working capital and additional pension contributions | |||
Increase in inventories | ( | ( | |
Decrease/(increase) in trade and other receivables | ( | ||
Increase in trade and other payables | |||
Decrease in provisions | ( | ( | |
Additional pension contributions | 4.5 | ( | ( |
Cash flow from operations | |||
Interest payments a | ( | ( | |
Interest receipts/(payments) on interest rate swaps a | ( | ||
Interest receipts on cross currency swap a | |||
Interest payments on cross currency swap a | ( | ( | |
Other interest paid – lease liabilities | 4.4 | ( | ( |
Borrowing facility fees paid | ( | ||
Interest received | |||
Tax paid | ( | ( | |
Net cash from operating activities | |||
| Investing activities | |||
Acquisition of 3Sixty Restaurants Limited | 5.1 | ( | |
Acquisition of Pesto Restaurants Ltd | 5.1 | ( | |
Purchases of property, plant and equipment | ( | ( | |
Purchases of intangible assets | ( | ( | |
Proceeds from sale of property, plant and equipment | |||
Finance lease principal repayments received | |||
Net cash used in investing activities | ( | ( | |
| Financing activities | |||
Purchase of own shares | 4.7 | ( | |
Repayment of principal in respect of securitised debt b | 4.4 | ( | ( |
Principal receipts on currency swap b | 4.4 | ||
Principal payments on currency swap b | 4.4 | ( | ( |
Cash payments for the principal portion of lease liabilities | 4.4 | ( | ( |
Repayment of other borrowings | ( | ||
Short-term financing of employee advances | |||
Net cash used in financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of the period | 4.4 | ||
Foreign exchange movements | ( | ( | |
Cash and cash equivalents at the end of the period | 4.4 |
a. Interest paid is split to show gross payments on the interest rate and cross currency swaps.
b. Principal repayments on securitised debt are split to show repayments relating to the cross currency swap.
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
Group cash flow statement
For the 52 weeks ended 28 September 2024
126 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Notes to the consolidated financial statements
Section 1 – Basis of preparation
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 127
Financial Statements
Accounting standard | Effective date |
| Amendments to IAS 1 and IFRS | 1 January 2023 |
| Practice Statement 2 (Disclosure | |
| of Accounting Policies) | |
| Amendments to IAS 8 (Definition | 1 January 2023 |
| of Accounting Estimates) | |
| Amendments to IAS 12 (Deferred | 1 January 2023 |
| Tax related to Assets and Liabilities | |
| arising from a Single Transaction) | |
IFRS 17 Insurance Contracts | 1 January 2023 |
Section 1 – Basis of preparation continued
Notes to the consolidated financial statements continued
128 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Accounting standard | Effective date | |
| Amendments to IFRS 16 Leases | 1 January 2024 | |
(Lease Liability in a Sale and Leaseback) | ||
| Amendments to IAS 1 | 1 January 2024 | |
| Presentation of Financial | ||
Statements (Classification of liabilities as Current or Non- Current and Non-current | ||
| Liabilities with Covenants) | ||
| Amendments to IAS 7 Statement | 1 January 2024 | |
| of Cash Flows and IFRS 7 Financial | ||
| Instruments (Disclosures – | ||
| Supplier Finance Arrangements) | ||
IFRS S1 General Requirements for Disclosure of Sustainability- related Financial Information | 1 January 2024 | |
| IFRS S2 Climate-related | 1 January 2024 | |
| Disclosures | ||
Amendments to IAS 21 The Effects of Changes in Foreign | 1 January 2025 | |
Exchange Rates (Lack of Exchangeability) | ||
| Amendments to IFRS 9 Financial | 1 January 2026 | |
| Instruments and IFRS 7 Financial | ||
| Instruments: Disclosures | ||
| (Amendments to the Classification | ||
| and Measurement of Financial | ||
| Instruments) | ||
| Annual Improvements to IFRS | 1 January 2026 | |
| Accounting Standards – | ||
| Amendments to: | ||
• | IFRS 1 First-time Adoption | |
| of International Financial | ||
| Reporting Standards; | ||
• | IFRS 7 Financial Instruments: | |
| Disclosures and it’s | ||
| accompanying Guidance | ||
| on implementing IFRS 7; | ||
• | IFRS 9 Financial Instruments; | |
• | IFRS 10 Consolidated Financial | |
| Statements; and | ||
• | IAS 7 Statement of Cash flows | |
IFRS 18 Presentation and Disclosure in Financial Statements | 1 January 2027 |
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 129
Financial Statements
Section 2 – Results for the period
UK | Germany | Total | ||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
| 52 weeks | 53 weeks | 52 weeks | 53 weeks | 52 weeks | 53 weeks | |
| £m | £m | £m | £m | £m | £m | |
Revenue – sales to third parties | 2,493 | 2,387 | 117 | 116 | 2,610 | 2,503 |
Segment non-current assets a | 4,706 | 4,442 | 51 | 46 | 4,757 | 4,488 |
Notes to the consolidated financial statements continued
130 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
The items identified in the current period are as follows:
| 2024 | 2023 | ||
| 52 weeks | 53 weeks | ||
| Notes | £m | £m | |
| Separately disclosed items | |||
Gaming machine settlement | a | – | (1) |
Fair value adjustment to investment in 3Sixty Restaurants Limited | b | – | 5 |
Settlement of pre-existing lease contracts on acquisition of 3Sixty Restaurants Limited | c | – | (3) |
Costs associated with the acquisition of 3Sixty Restaurants Limited | d | – | (1) |
Total separately disclosed items recognised within operating costs | – | – | |
Net profit arising on property disposals | 2 | 3 | |
| Movement in the valuation of the property portfolio: | |||
– Impairment credit/(charge) arising from the revaluation of freehold and long leasehold properties | e | 4 | (110) |
– Net impairment of short leasehold and unlicensed properties | f | – | (6) |
– Net impairment of right-of-use assets | g | (17) | (14) |
– Net impairment of computer software | h | (1) | – |
– Net impairment of goodwill | i | – | (1) |
Net movement in the valuation of the property portfolio | (14) | (131) | |
Total separately disclosed items before tax | (12) | (128) | |
Tax credit relating to above items | 4 | 28 | |
Total separately disclosed items after tax | (8) | (100) |
a. During prior periods £19m was received from HMRC, relating to VAT on gaming machine income for the period 2005 to 2012, including interest. An estimate of £20m for the
amount receivable was recognised in the 52 weeks ended 25 September 2021 as a separately disclosed item. As a result, the shortfall of £1m was recognised in the prior period.
b. During the prior period, on 18 June 2023 the Group acquired the remaining 60% of share capital of 3Sixty Restaurants Limited, after having a 40% interest since April 2018.
As a result of this acquisition achieved in stages, the Group has applied the principles of IFRS 3 and remeasured the 40% interest to fair value at acquisition (see note 5.1
for further details).
c. As a result of the acquisition of 3Sixty Restaurants Limited in the prior period, a loss was recognised at acquisition for the settlement of pre-existing lease contracts, due to the
terms of the contracts being below market terms (see note 5.1 for further details).
d. Relates to integration costs, restructuring costs and legal and professional fees incurred in the prior period acquisition of 3Sixty Restaurants Limited.
e. The impairment arising from the Group’s revaluation of its freehold and long leasehold pub estate comprises an impairment charge, where the carrying values of the properties
exceed their recoverable amount, net of a revaluation surplus that reverses past impairments. See note 3.1 for further details.
f. Impairment of short leasehold and unlicensed properties where their carrying values exceed their recoverable amounts, net of reversals of past impairments. See note 3.3
for further details.
g. Impairment of right-of-use assets where their carrying values exceed their recoverable amounts, net of reversals of past impairments. See note 3.3 for further details.
h. Impairment of computer software where the carrying value exceeds the recoverable amount. See note 3.3 for further details.
i. Impairment of goodwill where the carrying value exceeds the recoverable amount. See note 3.3 for further details.
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 131
Financial Statements
2.3 Revenue and operating costs continued
Accounting policies continued
| 2024 | 2023 | ||
| 52 weeks | 53 weeks | ||
Government grant scheme | Income statement line impact | £m | £m |
Apprenticeship incentives | Revenue – other | – | 1 |
Total Government grants received | – | 1 |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Food | 1,385 | 1,323 |
Drink | 1,132 | 1,092 |
Services | 93 | 87 |
Other – Apprenticeship incentives | – | 1 |
2,610 | 2,503 |
Section 2 – Results for the period continued
Notes to the consolidated financial statements continued
132 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Raw materials and food and drink consumables recognised as an expense a | 670 | 673 |
Changes in inventory of finished goods and work in progress | (2) | (2) |
Employee costs | 946 | 878 |
Hire of plant and machinery | 23 | 23 |
Property operating lease costs b | 11 | 8 |
Utility costs | 107 | 161 |
Business rates | 77 | 86 |
Other pub costs | 271 | 257 |
Other central costs | 65 | 61 |
Operating costs before depreciation and amortisation | 2,168 | 2,145 |
Net profit arising on property disposals | (2) | (3) |
Depreciation of property, plant and equipment (note 3.1) | 92 | 93 |
Depreciation of right-of-use assets (note 3.2) | 34 | 36 |
Amortisation of intangible assets (note 3.6) | 4 | 4 |
Net movement in the valuation of the property portfolio (note 2.2) | 14 | 131 |
Depreciation, amortisation and movements in the valuation of the property portfolio | 144 | 264 |
Total operating costs | 2,310 | 2,406 |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Wages and salaries | 852 | 795 |
Share-based payments (note 4.6) | 7 | 5 |
Social security costs | 68 | 61 |
Pensions (note 4.5) | 19 | 17 |
Total employee costs | 946 | 878 |
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Mitchells & Butlers plc Annual Report and Accounts 2024 133
Financial Statements
2.3 Revenue and operating costs continued
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
| Fees payable to the Group’s auditor for the: | ||
– audit of the consolidated financial statements | 0.4 | 0.3 |
– audit of the Company’s subsidiaries’ financial statements | 0.6 | 0.6 |
Total audit fees a | 1.0 | 0.9 |
Total fees | 1.0 | 0.9 |
Section 2 – Results for the period continued
Notes to the consolidated financial statements continued
134 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
| Current tax: | ||
– Corporation tax | (16) | (5) |
Total current tax charge | (16) | (5) |
| Deferred tax: | ||
– Origination and reversal of temporary differences | (33) | 11 |
– Effect of changes in UK tax rate | – | 3 |
– Amounts under-provided in prior periods | (1) | – |
Total deferred tax (charge)/credit | (34) | 14 |
Total tax (charge)/credit in the Group income statement | (50) | 9 |
| Further analysed as tax relating to: | ||
Profit before separately disclosed items | (54) | (19) |
Separately disclosed items | 4 | 28 |
Total tax (charge)/credit in the Group income statement | (50) | 9 |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Profit/(loss) before tax | 199 | (13) |
Taxation (charge)/credit at the UK standard rate of corporation tax of 25.0% (2023 22.0%) | (50) | 3 |
Expenses not deductible | (3) | (1) |
Permanent benefits | 4 | 5 |
Tax credit in respect of change in UK tax rate | – | 3 |
Effect of different tax rates of subsidiaries in other jurisdictions | – | (1) |
Adjustments in respect of prior periods | (1) | – |
Total tax (charge)/credit in the Group income statement | (50) | 9 |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
| Deferred tax in the Group income statement: | ||
Accelerated capital allowances | (14) | (14) |
Unrealised losses on revaluations | – | 28 |
Tax losses – UK | (15) | – |
Tax losses – Interest Restriction | (7) | – |
Retirement benefit obligations | 1 | – |
Share-based payments | 1 | – |
Total deferred tax (charge)/credit in the Group income statement | (34) | 14 |
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Mitchells & Butlers plc Annual Report and Accounts 2024 135
Financial Statements
2.4 Taxation continued
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
| Deferred tax: | ||
| Items that will not be reclassified subsequently to profit or loss: | ||
– Unrealised (gains)/losses due to revaluations – revaluation reserve | (74) | 18 |
– Unrealised gains due to revaluations – retained earnings | – | (4) |
– Remeasurement of pension liability | (42) | (9) |
(116) | 5 | |
| Items that may be reclassified subsequently to profit or loss: | ||
– Cash flow hedges | 6 | (5) |
Total tax charge recognised in other comprehensive income | (110) | – |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
| Deferred tax: | ||
– Tax credit related to share-based payments | 1 | – |
| 2024 | 2023 | |
| £m | £m | |
| Deferred tax assets: | ||
Retirement benefit obligation (note 4.5) | – | 5 |
Derivative financial instruments | 8 | 3 |
Tax losses – UK | 28 | 43 |
Share-based payments | 4 | 2 |
Right-of-use assets | 6 | 6 |
Tax losses – Interest restriction | 6 | 13 |
Total deferred tax assets | 52 | 72 |
| Deferred tax liabilities: | ||
Accelerated capital allowances | (86) | (72) |
Rolled over and held over gains | (164) | (164) |
Unrealised gains on revaluations | (251) | (176) |
Depreciated non-qualifying assets | (4) | (4) |
Retirement benefit obligation (note 4.5) | (35) | – |
Total deferred tax liabilities | (540) | (416) |
Total | (488) | (344) |
| 2024 | 2023 | |
| £m | £m | |
Deferred tax assets (after offsetting) | 3 | 4 |
Deferred tax liabilities (after offsetting) | (491) | (348) |
Net deferred tax liability | (488) | (344) |
Section 2 – Results for the period continued
Notes to the consolidated financial statements continued
136 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
2.5 Earnings/(loss) per share
Basic earnings per share (EPS) has been calculated by dividing the profit for the period by the weighted average number of ordinary shares in issue
during the period, excluding own shares held by employee share trusts.
For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares.
Adjusted earnings per ordinary share amounts are presented before separately disclosed items (see note 2.2) in order to allow an understanding
of the adjusted trading performance of the Group.
The profits used for the earnings per share calculations are as follows:
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Profit/(loss) for the period | 149 | (4) |
Separately disclosed items, net of tax | 8 | 100 |
Adjusted profit for the period a | 157 | 96 |
a. Adjusted profit and adjusted EPS are alternative performance measures (APMs) and are considered critical to aid understanding of the Group’s performance. These measures
are explained on pages 186 to 189 of this report.
The number of shares used for the earnings per share calculations are as follows:
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| million | million | |
Basic weighted average number of ordinary shares | 595 | 595 |
| Effect of dilutive potential ordinary shares: | ||
– Contingently issuable shares | 5 | – |
Diluted weighted average number of shares | 600 | 595 |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| pence | pence | |
| Basic earnings/(loss) per share | ||
Basic earnings/(loss) per share | 25.0p | (0.7p) |
Separately disclosed items net of tax per share | 1.4p | 16.8p |
Adjusted basic earnings per share a | 26.4p | 16.1p |
| Diluted earnings/(loss) per share | ||
Diluted earnings/(loss) per share | 24.8 p | (0.7) p |
Adjusted diluted earnings per share a | 26.2 p | 16.1 p |
a. Adjusted profit and adjusted EPS are alternative performance measures (APMs) and are considered critical to aid understanding of the Group’s performance. These measures
are explained on pages 186 to 189 of this report.
At 28 September 2024, 1,486,595 (2023 7,323,559) other share options were outstanding that could potentially dilute basic EPS in the future but were
not included in the calculation of diluted EPS as they are anti-dilutive for the periods presented.
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Mitchells & Butlers plc Annual Report and Accounts 2024 137
Financial Statements
Section 3 – Operating assets and liabilities
Notes to the consolidated financial statements continued
138 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
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Mitchells & Butlers plc Annual Report and Accounts 2024 139
Financial Statements
3.1 Property, plant and equipment continued
| Land and | Fixtures, fittings | ||
| buildings | and equipment | Total | |
| £m | £m | £m | |
| Cost or valuation | |||
At 24 September 2022 | 3,831 | 923 | 4,754 |
Acquired through business combinations (note 5.1) | 26 | 3 | 29 |
Additions | 36 | 115 | 151 |
Disposals a | (7) | (93) | (100) |
Net decrease from property revaluation | (186) | – | (186) |
Impairment of short leasehold properties | (1) | (5) | (6) |
Exchange differences | – | (1) | (1) |
At 30 September 2023 | 3,699 | 942 | 4,641 |
Acquired through business combinations (note 5.1) | 7 | – | 7 |
Additions | 32 | 131 | 163 |
Disposals a | (2) | (108) | (110) |
Net increase from property revaluation | 258 | – | 258 |
Net impairment of short leasehold properties | 3 | (3) | – |
Exchange differences | (1) | (1) | (2) |
At 28 September 2024 | 3,996 | 961 | 4,957 |
| Accumulated depreciation | |||
At 24 September 2022 | 80 | 480 | 560 |
Provided during the period | 5 | 88 | 93 |
Disposals a | (5) | (92) | (97) |
Exchange differences | – | (1) | (1) |
At 30 September 2023 | 80 | 475 | 555 |
Provided during the period | 4 | 88 | 92 |
Disposals a | (2) | (106) | (108) |
Exchange differences | – | (1) | (1) |
At 28 September 2024 | 82 | 456 | 538 |
| Net book value | |||
At 28 September 2024 | 3,914 | 505 | 4,419 |
At 30 September 2023 | 3,619 | 467 | 4,086 |
At 24 September 2022 | 3,751 | 443 | 4,194 |
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
140 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
| Group income statement | ||
Revaluation deficit charged as an impairment | (120) | (162) |
Reversal of past revaluation deficits | 124 | 52 |
Total impairment reversal/(charge) arising from the revaluation | 4 | (110) |
Impairment of short leasehold and unlicensed properties (note 3.3) | (7) | (11) |
Reversal of past impairments of short leasehold and unlicensed properties (note 3.3) | 7 | 5 |
Net impairment of short leaseholds and unlicensed properties | – | (6) |
Total impairment reversal/(charge) recognised in the income statement | 4 | (116) |
| Group statement of other comprehensive income | ||
Unrealised revaluation surplus | 356 | 162 |
Reversal of past revaluation surplus | (102) | (238) |
Total movement recognised in other comprehensive income | 254 | (76) |
Net increase/(decrease) in property, plant and equipment | 258 | (192) |
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Mitchells & Butlers plc Annual Report and Accounts 2024 141
Financial Statements
3.1 Property, plant and equipment continued
| Fixtures, | ||||
| Land and | fittings and | Net book | ||
| buildings | equipment | value a | ||
| Number of pubs | £m | £m | £m | |
| 28 September 2024 | ||||
Freehold properties | 1,336 | 3,572 | 399 | 3,971 |
Long leasehold properties | 92 | 257 | 32 | 289 |
Total revalued properties | 1,428 | 3,829 | 431 | 4,260 |
Short leasehold properties | 65 | 57 | 122 | |
Unlicensed properties | 15 | 2 | 17 | |
Other non-pub assets | 1 | 5 | 6 | |
Assets under construction | 4 | 10 | 14 | |
Total property, plant and equipment | 3,914 | 505 | 4,419 |
| Fixtures, | ||||
| Land and | fittings and | Net book | ||
| Number of | buildings | equipment | value a | |
| pubs | £m | £m | £m | |
| 30 September 2023 | ||||
Freehold properties | 1,330 | 3,298 | 368 | 3,666 |
Long leasehold properties | 94 | 236 | 31 | 267 |
Total revalued properties | 1,424 | 3,534 | 399 | 3,933 |
Short leasehold properties | 58 | 55 | 113 | |
Unlicensed properties | 16 | 2 | 18 | |
Other non-pub assets | 1 | 5 | 6 | |
Assets under construction | 10 | 6 | 16 | |
Total property, plant and equipment | 3,619 | 467 | 4,086 |
| Valuation multiple applied to fair maintainable trade | ||||||
Over 10 times | 9 to 10 times | 8 to 9 times | 7 to 8 times | Under 7 times | Total | |
| 28 September 2024 | ||||||
| Number of pubs in each fair maintainable trade banding: | ||||||
< £200k p.a. | 129 | 52 | 141 | 139 | 22 | 483 |
£200k to £360k p.a. | 12 | 87 | 163 | 76 | 29 | 367 |
> £360k p.a. | 53 | 126 | 265 | 78 | 56 | 578 |
194 | 265 | 569 | 293 | 107 | 1,428 |
| Valuation multiple applied to fair maintainable trade | ||||||
Over 10 times | 9 to 10 times | 8 to 9 times | 7 to 8 times | Under 7 times | Total | |
| 30 September 2023 | ||||||
| Number of pubs in each fair maintainable trade banding: | ||||||
< £200k p.a. | 83 | 42 | 174 | 179 | 17 | 495 |
£200k to £360k p.a. | 10 | 116 | 205 | 80 | 14 | 425 |
> £360k p.a. | 53 | 112 | 264 | 51 | 24 | 504 |
146 | 270 | 643 | 310 | 55 | 1,424 |
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
142 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| 2024 | 2023 | |
| £m | £m | |
| Contracts placed for expenditure on property, plant and equipment not provided for in the consolidated | ||
financial statements | 18 | 12 |
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Mitchells & Butlers plc Annual Report and Accounts 2024 143
Financial Statements
3.2 Leases continued
| Land and | |||
| buildings | Cars | Total | |
| £m | £m | £m | |
| Cost | |||
At 24 September 2022 | 568 | 6 | 574 |
Acquired through business combinations (note 5.1) | 6 | – | 6 |
Additions a | 32 | 4 | 36 |
Disposals | (12) | – | (12) |
Foreign currency movements | (2) | – | (2) |
At 30 September 2023 | 592 | 10 | 602 |
Acquired through business combinations (note 5.1) | 7 | – | 7 |
Additions a | 26 | 4 | 30 |
Disposals | (15) | (2) | (17) |
Foreign currency movements | (2) | – | (2) |
At 28 September 2024 | 608 | 12 | 620 |
| Accumulated depreciation and impairment | |||
At 24 September 2022 | 232 | 3 | 235 |
Provided during the period | 35 | 1 | 36 |
Disposals | (10) | – | (10) |
Impairment | 14 | – | 14 |
At 30 September 2023 | 271 | 4 | 275 |
Provided during the period | 32 | 2 | 34 |
Disposals | (10) | (2) | (12) |
Impairment | 17 | – | 17 |
Foreign currency movements | (1) | – | (1) |
At 28 September 2024 | 309 | 4 | 313 |
| Net book value | |||
At 28 September 2024 | 299 | 8 | 307 |
At 30 September 2023 | 321 | 6 | 327 |
At 24 September 2022 | 336 | 3 | 339 |
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
144 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| 2024 | 2023 | |
| £m | £m | |
| Amounts payable under lease liabilities | ||
Due within one year | 50 | 49 |
Due between one and two years | 50 | 52 |
Due between two and three years | 46 | 51 |
Due between three and four years | 49 | 42 |
Due between four and five years | 40 | 47 |
Due between five and ten years | 166 | 160 |
Due between ten and fifteen years | 103 | 115 |
Due between fifteen and twenty years | 56 | 66 |
Due between twenty and twenty five years | 16 | 18 |
Due between twenty five and thirty years | 11 | 11 |
Due after thirty years | 78 | 79 |
Total undiscounted lease liabilities | 665 | 690 |
Less: impact of discounting | (218) | (227) |
Present value of lease liabilities | 447 | 463 |
| Analysed as: | ||
Current lease liabilities – principal amounts due within twelve months | 33 | 33 |
Non-current lease liabilities – principal amounts due after twelve months | 414 | 430 |
447 | 463 |
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Mitchells & Butlers plc Annual Report and Accounts 2024 145
Financial Statements
3.2 Leases continued
Group as lessor – Finance lease receivables
A maturity analysis of the undiscounted future lease payments receivable used to calculate the finance lease receivable is shown below.
| 2024 | 2023 | |
| £m | £m | |
| Amounts receivable under finance leases | ||
Due within one year | 1 | 1 |
Due between one and two years | 1 | 1 |
Due between two and three years | 1 | 1 |
Due between three and four years | 1 | 1 |
Due between four and five years | 1 | 2 |
Due after five years | 9 | 9 |
Total undiscounted lease payments receivable | 14 | 15 |
Less: unearned finance income | (2) | (3) |
Present value of lease payments receivable | 12 | 12 |
| Net investment in the leases is analysed as: | ||
Current finance lease receivables – amounts due within 12 months | 1 | 1 |
Non-current finance lease receivables – amounts due after 12 months | 11 | 11 |
12 | 12 |
The Directors of the Group estimate the loss allowance on finance lease receivables at the end of the reporting period at an amount equal to lifetime
expected credit loss (ECL). None of the finance lease receivables at the end of the reporting period is past due. The Directors of the Group have
recognised a finance lease receivable impairment of £nil in the current period (2023 £nil).
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the
impairment for finance lease receivables.
Group as lessor – Operating leases
The Group leases a small proportion of its licensed and unlicensed properties to tenants. The majority of lease agreements have terms of 50 years or
less and are classified as operating leases. Where sublet arrangements are in place, future minimum lease payments and receipts are presented gross.
Total future minimum lease rental receipts under non-cancellable operating leases are as follows:
| 2024 | 2023 | |
| £m | £m | |
Due within one year | 7 | 10 |
Due between one and two years | 6 | 9 |
Due between two and three years | 5 | 8 |
Due between three and four years | 4 | 7 |
Due between four and five years | 4 | 6 |
Due after five years | 18 | 35 |
44 | 75 |
The total value of future minimum sub-lease rental receipts included above is £2m (2023 £4m).
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
146 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
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Mitchells & Butlers plc Annual Report and Accounts 2024 147
Financial Statements
3.3 Impairment continued
In summary, the carrying value of the cash-generating units and impairment charges and reversals recognised against those cash-generating units is
as follows:
| Impairment | Impairment | Net | |||
| Carrying value | charges | reversals | impairment | ||
| 2024 | 2024 | 2024 | 2024 | ||
| Note | £m | £m | £m | £m | |
Short leasehold properties | 3.1 | 122 | (7) | 7 | – |
Right-of-use assets | 3.2 | 307 | (29) | 12 | (17) |
Software | 3.6 | 6 | (1) | – | (1) |
Goodwill | 3.6 | 7 | – | – | – |
442 | (37) | 19 | (18) |
| Impairment | Impairment | Net | |||
| Carrying value | charges | reversals | impairment | ||
| 2023 | 2023 | 2023 | 2023 | ||
| Note | £m | £m | £m | £m | |
Short leasehold properties | 3.1 | 113 | (11) | 5 | (6) |
Right-of-use assets | 3.2 | 327 | (27) | 13 | (14) |
Software | 3.6 | 10 | – | – | – |
Goodwill | 3.6 | 2 | (1) | – | (1) |
452 | (39) | 18 | (21) |
Sensitivity analysis
Changes in forecast cash flows or the discount rate could impact the impairment charge recognised against the cash-generating units, and corporate
level assets.
Forecast cash flows
The forecast pre-tax cash flows used in the value in use calculations are site level forecasts determined from the Group forecast for FY 2025
to FY 2027 that was in place at the balance sheet date. For short leasehold sites and freehold/long leasehold sites with ROU or goodwill assets,
should future cash flows decline by 1%, this would result in an increase of £2m to the net impairment charge recognised.
Discount rate
The pre-tax discount rate applied to the forecast cash flows is derived from the Group’s post-tax weighted average cost of capital (WACC).
The assumptions used in the calculation of the Group’s WACC are benchmarked to externally available data. A single discount rate is applied
to all cash-generating units. Over recent periods, the discount rate used in impairment reviews has moved by c.1.0%. For short leasehold sites
and freehold/long leasehold sites with ROU or goodwill assets, an increase of 1.0% in the discount rate would result in an increase of £7m to
the net impairment charge recognised.
3.4 Working capital
Inventories
Accounting policy
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.
Inventories can be analysed as follows:
| 2024 | 2023 | |
| £m | £m | |
Goods held for resale | 27 | 25 |
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
148 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Trade and other receivables can be analysed as follows:
| 2024 | 2023 | |
| £m | £m | |
Trade receivables | 13 | 17 |
Other receivables | 16 | 16 |
Prepayments | 27 | 32 |
Other financial assets a | 30 | 58 |
Defined benefit pension blocked accounts b | 12 | – |
Total trade and other receivables | 98 | 123 |
| 2024 | 2023 | |
| £m | £m | |
Defined benefit pension blocked accounts b | – | 47 |
a. Other financial assets relate to cash collateral provided by a swap counterparty (see note 4.3).
b. Contributions to the MABEPP scheme have been paid into a blocked account since the scheme buy-in that took place during the year ended 24 September 2022 and are expected
to be repaid following the buy-out (2023 £12m in respect of the MABEPP blocked account and £35m in respect of the MABPP blocked account, since repaid) – see note 4.5 for
further details.
All trade, lease and other receivables are non-interest bearing. The Directors consider that the carrying amount of trade receivables and other
receivables approximately equates to their fair value. A provision for expected credit loss of £2m (2023 £3m) has been recognised against trade
and other receivables.
Credit risk is considered in note 4.3.
| 2024 | 2023 | |
| £m | £m | |
Trade payables | 114 | 100 |
Other taxation and social security | 99 | 100 |
Accrued charges | 186 | 182 |
Deferred income | 34 | 29 |
Other payables | 19 | 22 |
Other financial liabilities a | 30 | 58 |
Total trade and other payables | 482 | 491 |
| 2024 | 2023 | |
| £m | £m | |
Other payables b | 8 | – |
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Mitchells & Butlers plc Annual Report and Accounts 2024 149
Financial Statements
| Onerous property | Dilapidation | Total property | |
| provisions | provisions | provisions | |
| £m | £m | £m | |
At 24 September 2022 | 3 | 6 | 9 |
Provided in the period | 1 | 2 | 3 |
Utilised in the period | (2) | – | (2) |
Released in the period | – | (1) | (1) |
At 30 September 2023 | 2 | 7 | 9 |
Provided in the period | 2 | 4 | 6 |
Utilised in the period | (2) | – | (2) |
Released in the period | – | (1) | (1) |
At 28 September 2024 | 2 | 10 | 12 |
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
150 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
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Mitchells & Butlers plc Annual Report and Accounts 2024 151
Financial Statements
3.6 Goodwill and other intangible assets continued
| Computer | ||||
| Goodwill | Brands | software | Total | |
| £m | £m | £m | £m | |
| Cost | ||||
At 24 September 2022 | 7 | – | 20 | 27 |
Acquired through business combinations (note 5.1) | 1 | 5 | – | 6 |
Additions | – | – | 4 | 4 |
Disposals | – | – | (6) | (6) |
At 30 September 2023 | 8 | 5 | 18 | 31 |
Acquired through business combinations (note 5.1) | 5 | 2 | – | 7 |
Additions | – | – | 2 | 2 |
Disposals | – | – | (3) | (3) |
At 28 September 2024 | 13 | 7 | 17 | 37 |
| Accumulated amortisation and impairment | ||||
At 24 September 2022 | 5 | – | 8 | 13 |
Amortisation during the period | – | – | 4 | 4 |
Impairment | 1 | – | – | 1 |
Disposals | – | – | (4) | (4) |
At 30 September 2023 | 6 | – | 8 | 14 |
Amortisation during the period | – | – | 4 | 4 |
Impairment | – | – | 1 | 1 |
Disposals | – | – | (2) | (2) |
At 28 September 2024 | 6 | – | 11 | 17 |
| Net book value | ||||
At 28 September 2024 | 7 | 7 | 6 | 20 |
At 30 September 2023 | 2 | 5 | 10 | 17 |
At 24 September 2022 | 2 | – | 12 | 14 |
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
152 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| £m | |
| Cost | |
At 24 September 2022 | 6 |
Share in associates results | 1 |
Fair value adjustment as a result of business combination (note 2.2) | 5 |
Disposal of associate as a result of business combination | (12) |
At 30 September 2023 | – |
Share in associates results | – |
At 28 September 2024 | – |
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Mitchells & Butlers plc Annual Report and Accounts 2024 153
Financial Statements
Section 4 – Capital structure and financing costs
| 2024 | 2023 | |
| £m | £m | |
| Current | ||
Securitised debt a,b | 130 | 123 |
Unsecured revolving credit facilities c | (1) | (2) |
Overdrafts d | 12 | 23 |
Other borrowings e | 2 | – |
Total current | 143 | 144 |
| Non-current | ||
Securitised debt a,b | 1,041 | 1,186 |
Total borrowings | 1,184 | 1,330 |
| e. Short-term financing of employee advances. | ||
| 2024 | 2023 | |
| £m | £m | |
| Analysis by year of repayment | ||
Due within one year or on demand | 143 | 144 |
Due between one and two years | 157 | 164 |
Due between two and five years | 458 | 435 |
Due after five years | 426 | 587 |
Total borrowings | 1,184 | 1,330 |
| Initial | Principal | Effective | Principal outstanding | ||||
| principal | repayment | interest | 28 September | 30 September | |||
| borrowed | period (all by | rate | 2024 | 2023 | Expected | ||
| Tranche | £m | Interest | instalments) | % | £m | £m | WAL a |
A1N | 200 | Floating | 2011 to 2028 | 6.61 b | 62 | 75 | 2 years |
A2 | 550 | Fixed – 5.57% | 2003 to 2028 | 5.72 | 112 | 136 | 2 years |
A3N | 250 | Floating | 2011 to 2028 | 6.69 b | 77 c | 93 c | 2 years |
A4 | 170 | Floating | 2016 to 2028 | 6.37 b | 75 | 89 | 2 years |
AB | 325 | Floating | 2020 to 2032 | 6.28 b | 260 | 276 | 5 years |
B1 d | 350 | Fixed – 5.97% | 2003 to 2023 | 6.12 | – | 5 | 0 years |
B2 | 350 | Fixed – 6.01% | 2015 to 2028 | 6.12 | 205 | 240 | 2 years |
C1 | 200 | Fixed – 6.47% | 2029 to 2030 | 6.56 | 200 | 200 | 5 years |
C2 | 50 | Floating | 2033 to 2034 | 6.47 b | 50 | 50 | 9 years |
D1 | 110 | Floating | 2034 to 2036 | 6.68 b | 110 | 110 | 11 years |
2,555 | 1,151 | 1,274 |
Notes to the consolidated financial statements continued
154 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| 2024 | 2023 | |
| £m | £m | |
Principal outstanding | 1,151 | 1,274 |
A3N US$ notes exchange difference | 19 | 34 |
Principal outstanding at spot rate | 1,170 | 1,308 |
Deferred issue costs | (1) | (2) |
Accrued interest | 2 | 3 |
Carrying value at end of period | 1,171 | 1,309 |
Tranche | Interest | Margin |
A1N | 3 month SONIA | 0.57% |
A3N | 3 month SOFR | 0.71% |
A4 | 3 month SONIA | 0.69% |
AB | 3 month SONIA | 0.72% |
C2 | 3 month SONIA | 1.99% |
D1 | 3 month SONIA | 2.24% |
| 2024 | 2023 | |
| £m | £m | |
Principal outstanding at beginning of period | 1,308 | 1,448 |
Principal repaid during the period | (128) | (121) |
Net principal receipts on cross currency swap | 5 | 5 |
Exchange on translation of dollar loan notes | (15) | (24) |
Principal outstanding at end of period | 1,170 | 1,308 |
Deferred issue costs | (1) | (2) |
Accrued interest | 2 | 3 |
Carrying value at end of period | 1,171 | 1,309 |
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Mitchells & Butlers plc Annual Report and Accounts 2024 155
Financial Statements
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
| Finance costs | ||
Interest on securitised debt | (79) | (89) |
Interest on other borrowings | (13) | (11) |
Interest on lease liabilities | (17) | (16) |
Total finance costs | (109) | (116) |
| Finance income | ||
Interest receivable – cash | 10 | 8 |
Net pensions finance charge (note 4.5) | (2) | (3) |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
156 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
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Mitchells & Butlers plc Annual Report and Accounts 2024 157
Financial Statements
4.3 Financial instruments continued
Accounting policies continued
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
158 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| Within | One to | Two to | Three to | Four to | More than | ||
| one year | two years | three years | four years | five years | five years | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
| 28 September 2024 | |||||||
Securitised debt – loan notes | (201) | (198) | (198) | (198) | (192) | (496) | (1,483) |
Derivative financial liabilities (settled net) | (2) | (4) | (4) | (3) | (2) | (7) | (22) |
Derivative financial asset receipts | 24 | 24 | 24 | 24 | 6 | – | 102 |
Derivative financial asset payments | (20) | (20) | (20) | (20) | (5) | – | (85) |
Fixed rate: Securitised debt | (199) | (198) | (198) | (197) | (193) | (503) | (1,488) |
Lease liabilities | (50) | (50) | (46) | (49) | (40) | (430) | (665) |
Trade payables | (114) | – | – | – | – | – | (114) |
Other payables | (19) | (9) | – | – | – | – | (28) |
Accrued charges | (186) | – | – | – | – | – | (186) |
Other financial liabilities | (30) | – | – | – | – | – | (30) |
| 30 September 2023 | |||||||
Securitised debt – loan notes | (206) | (204) | (203) | (203) | (202) | (696) | (1,714) |
Derivative financial liabilities (settled net) | – | (2) | (2) | (2) | (1) | (3) | (10) |
Derivative financial asset receipts | 27 | 27 | 27 | 27 | 27 | 7 | 142 |
Derivative financial asset payments | (21) | (20) | (20) | (20) | (20) | (5) | (106) |
Fixed rate: Securitised debt | (200) | (199) | (198) | (198) | (196) | (697) | (1,688) |
Lease liabilities | (49) | (52) | (51) | (42) | (47) | (449) | (690) |
Trade payables | (100) | – | – | – | – | – | (100) |
Other payables | (22) | – | – | – | – | – | (22) |
Accrued charges | (182) | – | – | – | – | – | (182) |
Other financial liabilities | (58) | – | – | – | – | – | (58) |
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Mitchells & Butlers plc Annual Report and Accounts 2024 159
Financial Statements
4.3 Financial instruments continued
| 12-month | Lifetime | |||
| FVTPL | ECL | ECL | Total | |
| £m | £m | £m | £m | |
| 28 September 2024: | ||||
Cash and cash equivalents a | – | 164 | – | 164 |
Trade receivables b | – | – | 13 | 13 |
Other receivables b | – | 16 | – | 16 |
Other financial assets | – | 30 | – | 30 |
Defined benefit pension blocked account | – | 12 | – | 12 |
Finance lease receivables c | – | 1 | 11 | 12 |
Derivatives | 19 | – | – | 19 |
| 30 September 2023: | ||||
Cash and cash equivalents a | – | 103 | – | 103 |
Trade receivables b | – | – | 17 | 17 |
Other receivables b | – | 16 | – | 16 |
Other financial assets | – | 58 | – | 58 |
Defined benefit pension blocked account | – | 47 | – | 47 |
Finance lease receivables c | – | – | 12 | 12 |
Derivatives | 35 | – | – | 35 |
| 2024 | 2023 | |
| £m | £m | |
Net debt excluding leases (note 4.4) | 989 | 1,170 |
Total equity | 2,566 | 2,130 |
Total capital | 3,555 | 3,300 |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
160 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| 2024 | 2023 | |
| £m | £m | |
Interest income a | 1 | 2 |
Interest expense b | – | – |
Profit impact | 1 | 2 |
Derivative financial instruments (fair values) c | 40 | 31 |
Total equity | 41 | 33 |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Losses arising during the period | (34) | (9) |
Reclassification adjustments for losses included in profit or loss within finance costs | 11 | 30 |
(23) | 21 |
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Mitchells & Butlers plc Annual Report and Accounts 2024 161
Financial Statements
4.3 Financial instruments continued
| Carrying amount of | Changes in fair | |||
| Nominal amount | hedging instrument | value used for | ||
| of hedging | calculating hedge | |||
| instrument | Assets | Liabilities | ineffectiveness | |
| £m | £m | £m | £m | |
| 2024 | ||||
| Interest rate risk | ||||
– 10 interest rate swaps | 633 | – | (29) | (22) |
| Foreign exchange risk | ||||
– Cross currency swap | 77 | 19 | – | (16) |
| 2023 | ||||
| Interest rate risk | ||||
– 10 interest rate swaps | 693 | – | (7) | 21 |
| Foreign exchange risk | ||||
– Cross currency swap | 93 | 35 | – | (24) |
| Positions that | |||||
| could be net in | |||||
| Positions netted | Balance sheet | balance sheet | Overall net | ||
| Gross position | in balance sheet | position | but are not | exposure | |
| £m | £m | £m | £m | £m | |
Counterparty A – interest rate swaps | (13) | – | (13) | – | (13) |
Counterparty B – interest rate swaps | (16) | – | (16) | 19 | 3 |
Net interest rate swaps | (29) | – | (29) | 19 | (10) |
Counterparty B – cross currency swap liability | (78) | 78 | – | – | – |
Counterparty B – cross currency swap asset | 97 | (78) | 19 | (19) | – |
Net cross currency swap | 19 | – | 19 | (19) | – |
Total | (10) | (10) | – | (10) |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
162 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| Positions that | |||||
| could be net in | |||||
| Positions netted | Balance sheet | balance sheet | Overall net | ||
| Gross position | in balance sheet | position | but are not | exposure | |
| £m | £m | £m | £m | £m | |
Counterparty A – interest rate swaps | (3) | – | (3) | – | (3) |
Counterparty B – interest rate swaps | (4) | – | (4) | 35 | 31 |
Net interest rate swaps | (7) | – | (7) | 35 | 28 |
Counterparty B – cross currency swap liability | (94) | 94 | – | – | – |
Counterparty B – cross currency swap asset | 129 | (94) | 35 | (35) | – |
Net cross currency swap | 35 | – | 35 | (35) | – |
Total | 28 | – | 28 | – | 28 |
| Derivative financial instruments – fair value | |||||
| Non-current | Current | Current | Non-current | ||
| assets | assets | liabilities | liabilities | Total | |
| £m | £m | £m | £m | £m | |
| Derivatives at fair value designated in cash flow hedges: | |||||
– Interest rate swaps | – | – | (2) | (27) | (29) |
– Cross currency swap | 19 | – | – | – | 19 |
28 September 2024 | 19 | – | (2) | (27) | (10) |
30 September 2023 | 33 | 2 | – | (7) | 28 |
| At | At | |||
| 30 September | Cash | Fair value | 28 September | |
| 2023 | movements | movements | 2024 | |
| £m | £m | £m | £m | |
Cash flow hedges | 28 | (4) | (34) | (10) |
Total derivatives | 28 | (4) | (34) | (10) |
| At | At | |||
| 24 September | Cash | Fair value | 30 September | |
| 2022 | movements | movements | 2023 | |
| £m | £m | £m | £m | |
Cash flow hedges | 31 | (1) | (2) | 28 |
Share options | 1 | – | (1) | – |
Total derivatives | 32 | (1) | (3) | 28 |
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Mitchells & Butlers plc Annual Report and Accounts 2024 163
Financial Statements
4.3 Financial instruments continued
2024 | 2023 | |||
| Carrying value | Fair value | Carrying value | Fair value | |
| £m | £m | £m | £m | |
| Financial assets at amortised cost: | ||||
– Cash and cash equivalents (note 4.4) | 176 | 176 | 126 | 126 |
– Trade receivables (note 3.4) | 13 | 13 | 17 | 17 |
– Other receivables (note 3.4) | 16 | 16 | 16 | 16 |
– Other financial assets (note 3.4) | 30 | 30 | 58 | 58 |
– Defined benefit pension blocked account (note 3.4) | 12 | 12 | 47 | 47 |
– Finance lease receivables (note 3.2) | 12 | 12 | 12 | 12 |
259 | 259 | 276 | 276 | |
| Financial assets – derivatives at FVTPL: | ||||
– Derivative instruments in designated hedge accounting relationships (note 4.3) | 19 | 19 | 35 | 35 |
19 | 19 | 35 | 35 | |
| Financial liabilities at amortised cost: | ||||
– Borrowings (note 4.1) | (1,184) | (1,084) | (1,330) | (1,162) |
– Lease liabilities (note 3.2) | (447) | (447) | (463) | (463) |
– Trade payables (note 3.4) | (114) | (114) | (100) | (100) |
– Accrued charges (note 3.4) | (186) | (186) | (182) | (182) |
– Other payables (note 3.4) | (27) | (27) | (22) | (22) |
– Other financial liabilities (note 3.4) | (30) | (30) | (58) | (58) |
(1,988) | (1,888) | (2,155) | (1,987) | |
| Financial liabilities – derivatives at FVTPL: | ||||
– Derivative instruments in designated hedge accounting relationships (note 4.3) | (29) | (29) | (7) | (7) |
| Level 1 | Level 2 | Level 3 | Total | |
| Fair value at 28 September 2024 | £m | £m | £m | £m |
| Financial assets: | ||||
Currency swaps | – | 19 | – | 19 |
| Financial liabilities: | ||||
Interest rate swaps | – | (29) | – | (29) |
– | (10) | – | (10) |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
164 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| Level 1 | Level 2 | Level 3 | Total | |
| Fair value at 30 September 2023 | £m | £m | £m | £m |
| Financial assets: | ||||
Currency swaps | – | 35 | – | 35 |
| Financial liabilities: | ||||
Interest rate swaps | – | (7) | – | (7) |
– | 28 | – | 28 |
| 2024 | 2023 | ||
| Note | £m | £m | |
Cash and cash equivalents | 176 | 126 | |
Overdraft | 4.1 | (12) | (23) |
Cash and cash equivalents as presented in the cash flow statement a | 164 | 103 | |
Securitised debt | 4.1 | (1,171) | (1,309) |
Unsecured revolving credit facility | 4.1 | 1 | 2 |
Derivatives hedging securitised debt b | 4.1 | 19 | 34 |
Short-term financing of employee advances c | 4.1 | (2) | – |
Net debt excluding leases | (989) | (1,170) | |
Lease liabilities | 3.2 | (447) | (463) |
Net debt including leases | (1,436) | (1,633) |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Net increase/(decrease) in cash and cash equivalents | 62 | (86) |
| Add back cash flows in respect of other components of net debt: | ||
Principal repayments on securitised debt | 128 | 121 |
Principal receipts on cross currency swap | (21) | (21) |
Principal payments on cross currency swap | 16 | 16 |
Short-term financing of employee advances | (2) | – |
Decrease in net debt arising from cash flows | 183 | 30 |
Movement in capitalised debt issue costs net of accrued interest | (1) | (1) |
Decrease in net debt excluding leases | 182 | 29 |
Opening net debt excluding leases | (1,170) | (1,198) |
Foreign exchange movements on cash | (1) | (1) |
Closing net debt excluding leases | (989) | (1,170) |
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Mitchells & Butlers plc Annual Report and Accounts 2024 165
Financial Statements
4.4 Net debt continued
Movement in lease liabilities:
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Opening lease liabilities | (463) | (481) |
Acquired through business combinations (note 5.1) | (5) | (5) |
Additions a | (28) | (35) |
Interest charged during the period (note 4.2) | (17) | (16) |
Repayment of principal | 41 | 53 |
Payment of interest | 17 | 16 |
Disposals | 7 | 4 |
Foreign currency movements | 1 | 1 |
Closing lease liabilities | (447) | (463) |
a. Additions to lease liabilities include new leases and lease extensions or rent reviews relating to existing leases.
The movement in net debt including leases for the 52 weeks ended 28 September 2024 is represented by:
| At | Cash flow | Non-cash | Foreign | At | |
| 30 September | movements | movements | currency | 28 September | |
| 2023 | in the period | in the period | movements | 2024 | |
| £m | £m | £m | £m | £m | |
Securitised debt | (1,309) | 128 | – | 10 | (1,171) |
Derivatives hedging securitised debt | 34 | (5) | – | (10) | 19 |
(1,275) | 123 | – | – | (1,152) | |
Revolving credit facilities | 2 | – | (1) | – | 1 |
Short-term financing | – | (2) | – | – | (2) |
Lease liabilities a | (463) | 58 | (43) | 1 | (447) |
Total liabilities arising from financing activities | (1,736) | 179 | (44) | 1 | (1,600) |
Cash and cash equivalents | 103 | 62 | – | (1) | 164 |
Net debt including leases | (1,633) | 241 | (44) | – | (1,436) |
a. Cash movements of £58m relate to £41m repayment of principal on lease liabilities and £17m of interest paid on lease liabilities.
The movement in net debt including leases for the 53 weeks ended 30 September 2023 is represented by:
| At | Cash flow | Non-cash | Foreign | At | |
| 24 September | movements | movements | currency | 30 September | |
| 2022 | in the period | in the period | movements | 2023 | |
| £m | £m | £m | £m | £m | |
Securitised debt | (1,447) | 121 | (3) | 20 | (1,309) |
Derivatives hedging securitised debt | 59 | (5) | – | (20) | 34 |
(1,388) | 116 | (3) | – | (1,275) | |
Revolving credit facilities | – | 2 | – | – | 2 |
Lease liabilities a | (481) | 69 | (52) | 1 | (463) |
Total liabilities arising from financing activities | (1,869) | 187 | (55) | 1 | (1,736) |
Cash and cash equivalents | 190 | (86) | – | (1) | 103 |
Net debt including leases | (1,679) | 101 | (55) | – | (1,633) |
a. Cash movements of £69m relate to £53m repayment of principal on lease liabilities and £16m of interest paid on lease liabilities.
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
166 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 167
Financial Statements
4.5 Pensions continued
MABPP – buy-in policy transaction
During the prior period the Trustees of the MABPP entered a Bulk Purchase Agreement (‘BPA’) with Standard Life. The resulting policy was set
up to provide the plan with sufficient funding to cover all known member benefits of the scheme. As in the prior period the following considerations
remain applicable:
• the employer is not relieved of primary responsibility for the obligation. The policy simply covers the benefit payments that continue to be payable
by the scheme;
• the contract is effectively an investment of the scheme;
• the contract provides the option to convert the annuity into individual policies, which would transfer the obligation to the insurer (known as a
“buy-out”). Whilst this course of action may be considered in future, this is not a requirement and a separate decision will be required before any
buy-out proceeds. The Company had not made a decision, and has still not made a decision, to move to buy-out; and
• the Trustee and insurer continue to progress a data cleanse project. An adjustment has been made to the assets held by the MABPP to allow
for £6m additional premium, which is the current best estimate of the true-up premium payable to the insurer once the data cleanse project is
completed. This is based on the current status of the data cleanse project, and may be updated in future as this progresses to allow for any further
changes, including the potential impact of the recent Virgin Media legal case.
MABPP – recognition of actuarial surplus
Over the course of 2024, the Trustees of MABPP resolved that any surplus arising in MABPP can be used to pay for the employer contributions
to the defined contribution section of MABPP. In connection with this, before the buy-out of MABEPP occurred in September 2024, the defined
contribution members within MABEPP were moved across to MABPP, along with the remaining surplus funds from the MABEPP (with the exception
of £3m which remains in MABEPP and which will transfer to MABPP on the wind up of the scheme), to enable future employer contributions for them
to be met out of the surplus in the MABPP. Since this is a change in the Trustee’s agreed use of the MABPP surplus compared to previous years, the
accounting surplus is being recognised in full in this year’s accounts, with the full value of the surplus of £164m (including the £3m remaining within
MABEPP until the wind up of the scheme) expected to be an economic benefit to the Company. This economic benefit has been determined over the
future lifetime of the DC section of the plan, in particular on the basis that this section remains open to new members in its current form, and therefore
will continue to remain active for the foreseeable future. In prior periods no actuarial surplus has been recognised as the Company did not have
an unconditional right to recover any surplus from the pension plans.
Actuarial valuation
The actuarial valuations used for IAS 19 (revised) purposes are based on the results of the latest full actuarial valuation carried out as at 31 March 2022,
which completed in December 2022, and updated by the schemes’ independent qualified actuaries to 28 September 2024. Schemes’ assets are stated
at market value at 28 September 2024 and the liabilities of the schemes have been assessed as at the same date using the projected unit method.
IAS 19 (revised) requires that the schemes’ liabilities are discounted using market yields at the end of the period on high-quality corporate bonds.
The principal financial assumptions have been updated to reflect changes in market conditions in the period and are as follows. Whilst the Executive
Plan bought out all it’s liabilities with Legal & General during the period, the assumptions applicable to the Executive Plan have been used in the
settlement calculation given it’s proximity to the year end date.
2024 | 2023 | |||
Main plan | Executive plan | Main plan | Executive plan | |
Discount rate | 5.1% | 5.1% | 5.7% | 5.7% |
Pensions increases – RPI max 5% | 3.0% | 3.0% | 3.1% | 3.1% |
Inflation rate – RPI | 3.2% | 3.2% | 3.3% | 3.3% |
The discount rate is based on a yield curve for AA corporate rated bonds which are consistent with the currency and estimated term of retirement
benefit liabilities.
To determine the RPI assumption the gilt implied inflation yield curve has been used, reflecting the duration of the Plan’s cash flows, and adjusting
for an assumed inflation risk premium.
The mortality assumptions were reviewed following the 2022 actuarial valuation, although for MABETUS a member-specific analysis has been
carried out in 2024 to set a more appropriate mortality assumption due to the unique membership make-up (previously the MABETUS life
expectancies were set equal to those used in the Executive Plan). A summary of the average life expectancies assumed is as follows:
2024 | 2023 | |||||
| Main plan | Executive plan | MABETUS | Main plan | Executive plan | MABETUS | |
| years | years | years | years | years | years | |
Male member aged 65 (current life expectancy) | 20.9 | 22.9 | 24.3 | 20.9 | 22.9 | 22.9 |
Male member aged 45 (life expectancy at 65) | 22.3 | 24.3 | 25.9 | 22.3 | 24.3 | 24.3 |
Female member aged 65 (current life expectancy) | 23.8 | 24.7 | 27.7 | 23.8 | 24.7 | 24.7 |
Female member aged 45 (life expectancy at 65) | 25.2 | 26.1 | 28.9 | 25.2 | 26.1 | 26.1 |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
168 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Minimum funding requirements
The results of the 2022 actuarial valuation, which was completed in December 2022, show a marginal surplus. As a result of the 2022 actuarial
valuation, the Company subsequently agreed a revised schedule of contributions for both the MABPP and MABEPP schemes.
For the MABEPP, the agreement confirms that from December 2022, payments into the “Blocked Account” that commenced after completion
of the buy-in transaction in 2021 have been suspended.
For the MABPP, contributions since December 2022 were made into a “Blocked Account”. As the scheme is in surplus, in the current period the
Trustee agreed to return in full the balance of £36m in the blocked account to the Company, which the Company had recognised within non-current
receivable in the prior period.
As a result, the remaining Blocked Account for MABEPP is recognised within current other receivables (note 3.4) as recovery of this amount is expected.
The amount recognised as at 28 September 2024 is £12m (2023 £47m; £12m in respect of the MABEPP blocked account and £35m in respect of the
MABPP blocked account, since repaid – both shown within non-current other receivables).
As a result of the above changes, the resulting net pension asset as at 28 September 2024 is £139m, which represents £164m surplus in relation
to MABEPP and MABPP, with a liability of £25m relating to MABETUS.
| Increase/ | |
| (decrease) | |
| in actuarial | |
| surplus | |
| 2024 | |
| 2024 | £m |
0.5% increase in discount rate | 2 |
0.2% increase in inflation rate | (1) |
Additional one year decrease to life expectancy | 1 |
| Increase/ | |
| (decrease) | |
| in actuarial surplus | |
| 2023 | |
| 2023 | £m |
1.9% increase in discount rate | 4 |
0.3% increase in inflation rate | (2) |
Additional one year decrease to life expectancy | – |
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 169
Financial Statements
4.5 Pensions continued
Principal risks and assumptions
Following the MABEPP buy-out the principal risks and assumptions apply to the MABPP and MABETUS schemes which are not exposed to any
unusual, entity specific or scheme specific risks. Whilst there are general risks as set out below, they have been mitigated in the MABPP due to the
impact of the buy-in.
Inflation – The majority of the plans’ obligations are linked to inflation. Higher inflation will lead to increased liabilities which is offset by the MABPP
holding the BPA with Standard Life.
Interest rate – The plans’ liabilities are determined using discount rates derived from yields on AA-rated corporate bonds. A decrease in corporate
bond yields will increase plan liabilities though this will be offset by the MABPP holding the BPA with Standard Life.
Mortality – The majority of the plans’ obligations are to provide benefits for the life of the members and their partners, so any increase in life
expectancy will result in an increase in the plans’ liabilities, although this will be offset by the MABPP holding the BPA with Standard Life.
Asset returns – The main asset held by the MABPP is the BPA with Standard Life, with other assets invested in a diversified portfolio of equities,
bonds and other assets. Volatility in the non-BPA asset values will lead to movements in the net deficit/surplus reported in the Group balance sheet
for the plans which in addition will also impact the pension finance charge in the Group income statement.
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| Group income statement | £m | £m |
| Operating profit: | ||
Employer contributions (defined contribution plans) (note 2.3) | (19) | (17) |
Administrative costs (defined benefit plans) | (5) | (5) |
Charge to operating profit | (24) | (22) |
| Finance costs: | ||
Net pensions finance income on actuarial surplus | 6 | 14 |
Additional pensions finance charge due to asset ceiling/minimum funding | (8) | (17) |
Net finance charge in respect of pensions | (2) | (3) |
Total charge | (26) | (25) |
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| Group statement of comprehensive income | £m | £m |
Return on scheme assets and effects of changes in assumptions | 16 | (153) |
Movement in pension liabilities recognised due to asset ceiling/minimum funding | 150 | 195 |
Remeasurement of pension liabilities | 166 | 42 |
| 2024 | 2023 | |
| Group balance sheet | £m | £m |
Fair value of schemes’ assets | 1,238 | 1,434 |
Present value of schemes’ liabilities | (1,099) | (1,313) |
Actuarial surplus in the schemes | 139 | 121 |
Additional liabilities recognised due to asset ceiling/minimum funding | – | (143) |
Total pension asset/(liabilities) a | 139 | (22) |
Associated deferred tax (liability)/asset (note 2.4) | (35) | 5 |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
170 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| Schemes’ assets | ||
| 2024 | 2023 | |
| £m | £m | |
Fair value of schemes’ assets at beginning of period | 1,434 | 1,699 |
Interest income | 79 | 88 |
| Remeasurement gain/(loss): | ||
– Loss on schemes’ assets (excluding amounts included in net finance charge) | 100 | (277) |
Additional employer contributions | 1 | 8 |
Benefits paid | (84) | (79) |
Administration costs | (5) | (5) |
Settlements | (287) | – |
At end of period | 1,238 | 1,434 |
| Defined benefit obligation | ||
| 2024 | 2023 | |
| £m | £m | |
Present value of defined benefit obligation at beginning of period | (1,313) | (1,442) |
Interest cost | (72) | (74) |
Benefits paid | 84 | 79 |
| Remeasurement losses: | ||
– Effect of changes in demographic assumptions | (1) | 47 |
– Effect of changes in financial assumptions | (81) | 82 |
– Effect of experience adjustments | (3) | (5) |
Settlements | 287 | – |
At end of period a | (1,099) | (1,313) |
| 2024 | 2023 | |
| £m | £m | |
Cash and equivalents | 82 | 67 |
| Pooled investment funds: | ||
– Real estate debt | 16 | 23 |
| Debt instruments: | ||
– Secured income debt | 82 | 79 |
Forward foreign exchange contracts | – | 1 |
MABPP insurance policies | 1,058 | 983 |
MABEPP insurance policy | – | 281 |
Fair value of assets | 1,238 | 1,434 |
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 171
Financial Statements
2024 | 2023 | |
Share Incentive Plan | 282.5p | 228.0p |
Short Term Deferred Incentive Plan | 229.0p | 134.6p |
Performance Share Plan | 260.2p | – |
Restricted Share Plan | – | 134.6p |
| 2024 | 2023 | |
| Sharesave | Sharesave | |
| Plan | Plan | |
Valuation model | Black-Scholes | Black-Scholes |
Weighted average share price | 282.5p | 228.0p |
Exercise price | 278.0p | 211.0p |
Expected dividend yield | – | – |
Risk-free interest rate | 4.13% | 4.30% |
Volatility a | 43.1% | 42.2% |
Expected life (years) b | 3.5 | 4.1 |
Weighted average fair value of grants during the period | 110.2p | 94.1p |
| Weighted average | ||||
| Number of shares | exercise price | |||
| 2024 | 2023 | 2024 | 2023 | |
| Sharesave Plan | m | m | p | p |
Outstanding at the beginning of the period | 5.6 | 5.7 | 219.5 | 223.5 |
Granted | 1.8 | 2.0 | 278.0 | 211.0 |
Forfeited | (0.7) | (1.1) | 220.8 | 228.7 |
Expired | (0.1) | (1.0) | 223.2 | 216.0 |
Outstanding at the end of the period | 6.6 | 5.6 | 235.4 | 219.5 |
Exercisable at the end of the period | – | – | – | – |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
172 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
The outstanding options for the sharesave plan scheme had an exercise price of between 199.0p and 278.0p (2023 between 199.0p and 256.0p)
and the weighted average remaining contract life was 2.7 years (2023 3.1 years). The number of forfeited shares in the period includes 369,713
(2023 744,873) cancellations.
Sharesave plan options were exercised on a range of dates. The average share price through the period was 260.0p (2023 174.9p).
| Number of shares | ||
| 2024 | 2023 | |
| Share Incentive Plan | m | m |
Outstanding at the beginning of the period | 2.2 | 2.1 |
Granted | 0.3 | 0.3 |
Exercised | (0.2) | (0.2) |
Outstanding at the end of the period | 2.3 | 2.2 |
Exercisable at the end of the period | 1.5 | 1.4 |
Options under the Share Incentive Plan are capable of remaining within the SIP trust indefinitely while participants continue to be employed.
| Number of shares | ||
| 2024 | 2023 | |
| Restricted Share Plan | m | m |
Outstanding at the beginning of the period | 4.8 | 2.4 |
Granted | – | 2.4 |
Exercised | (1.0) | – |
Forfeited | (0.1) | – |
Outstanding at the end of the period | 3.7 | 4.8 |
Exercisable at the end of the period | – | – |
The weighted average remaining contract life of the RSP options was 0.8 years (2023 1.5 years).
| Number of shares | ||
| 2024 | 2023 | |
| Performance Share Plan | m | m |
Outstanding at the beginning of the period | – | – |
Granted | 2.7 | – |
Outstanding at the end of the period | 2.7 | – |
Exercisable at the end of the period | – | – |
The weighted average remaining contract life of the PSP options was 2.2 years.
| Number of shares | ||
| 2024 | 2023 | |
| Performance Restricted Share Plan | m | m |
Outstanding at the beginning of the period | 0.5 | 1.8 |
Expired | (0.5) | (1.3) |
Outstanding at the end of the period | – | 0.5 |
Exercisable at the end of the period | – | – |
The weighted average remaining contract life of the PRSP options was nil years (2023 0.1 years).
| Number of shares | ||
| 2024 | 2023 | |
| STDIP | m | m |
Outstanding at the beginning of the period | 0.1 | – |
Granted | 0.3 | 0.1 |
Outstanding at the end of the period | 0.4 | 0.1 |
Exercisable at the end of the period | – | – |
The weighted average remaining contract life of the STDIP options was 0.6 years (2023 0.7 years).
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 173
Financial Statements
2024 | 2023 | |||
| Number of | Number of | |||
| Called up share capital | shares | £m | shares | £m |
| Allotted, called up and fully paid | ||||
Ordinary shares of 8 13 ⁄ 24 p each At start of period | 597,726,859 | 51 | 597,383,363 | 51 |
Share capital issued a | 330,812 | – | 343,496 | – |
At end of period | 598,057,671 | 51 | 597,726,859 | 51 |
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
174 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 175
Financial Statements
5.1 Acquisitions
On 14 May 2024, the Group acquired the entire share capital of Pesto Restaurants Ltd, a group of ten restaurants based in the UK, for consideration
which will be determined over two payments and partly contingent on future performance of the business. The consideration will be no more than
£15m and has been assessed at £12m for the purposes of calculation of goodwill under IFRS 3.
The amounts recognised in respect of identifiable assets and liabilities relating to the acquisition were as follows.
| Fair value on | |
| acquisition | |
| £m | |
Land and buildings | 7 |
Right-of-use assets | 7 |
Brand intangible | 2 |
Cash and cash equivalents | 2 |
Trade and other payables | (3) |
Lease liabilities | (5) |
Borrowings | (1) |
Deferred tax liability | (2) |
Net identifiable assets of Pesto Restaurants Ltd | 7 |
Goodwill | 5 |
Fair value of assets and liabilities | 12 |
| Consideration: | |
Initial cash consideration | 4 |
Contingent consideration | 8 |
Total consideration | 12 |
Initial cash consideration | 4 |
Less: cash and cash equivalents acquired | (2) |
Net cash outflow on acquisition | 2 |
Goodwill of £5m has arisen on the acquisition of Pesto Restaurants Ltd primarily through the benefits that will be gained from cost synergies that
will be obtained on joining the Group and future conversions of other Group outlets.
The brand intangible has been fair valued by reference to an estimated royalty income based on forecast cash flows for Pesto Restaurants Ltd
over the expected useful life of 20 years.
Contingent consideration of £8m is shown as a non-current liability within other payables (see note 3.4). Contingent consideration is payable
to the previous owners of Pesto Restaurants Ltd, at a level dependent on the financial performance of that business over the 12 months ending
27 September 2025, and not to exceed £15m. It has been measured at its fair value at the acquisition date based on trading forecast and discounted
at a risk-free rate.
Contingent consideration is measured in line with the Group’s accounting policy for business combinations (see note 3.6). It will be re-measured at
subsequent reporting dates, as a non-measurement period adjustment, with the corresponding gain or loss being recognised in the income statement.
Pesto Restaurants Ltd has contributed £8m to revenue and £1m to the Group’s operating profit for the period between acquisition date and the
balance sheet date. If Pesto Restaurants Limited had been included as a subsidiary since the start of the financial period, it would have contributed
£20m revenue and £2m to the Group’s operating profit.
In the prior year the Group completed the acquisition of 3Sixty Restaurants Limited. In August 2018, the Group acquired 40% of the share capital
of 3Sixty Restaurants Limited for £4m, together with a put and call option that would enable the Group to purchase the remaining 60% share capital
at a future date. On 18 April 2023, the Group exercised the call option, resulting in the acquisition of the remaining 60% of share capital of 3Sixty
Restaurants Limited, for £17m, with the purchase completing on 18 June 2023. The date of the option exercise, 18 April 2023, was considered
to be the date at which control passed to the Group, and therefore consolidation took place from that date.
Section 5 – Other notes
Notes to the consolidated financial statements continued
176 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| Fair value on | |
| acquisition | |
| £m | |
| Consideration: | |
Cash consideration for purchase of the remaining 60% interest | 17 |
Less: cash and cash equivalents acquired | (5) |
Net cash outflow on acquisition | 12 |
Plus: Fair value of the existing 40% interest at acquisition | 12 |
Less: settlement of pre-existing contracts | (3) |
Net consideration | 21 |
At acquisition, the carrying value of the investment in 3Sixty Restaurants Limited of £7m was revised to fair value of £12m, with a gain of £5m
recognised as a separately disclosed item within the income statement (see note 2.2).
In addition, the pre-existing property leases that existed between the Group and 3Sixty Restaurants Limited were treated as settled at the acquisition
date, with a resulting £3m loss recognised as a separately disclosed item within the income statement (see note 2.2).
| 2024 | 2023 | |
| 52 weeks | 53 weeks | |
| £m | £m | |
Short-term employee benefits | 7 | 6 |
3Sixty Restaurants Limited | Fatboy Pub Company Limited | |||
| 2024 | 2023 | 2024 | 2023 | |
| 52 weeks | 53 weeks | 52 weeks | 53 weeks | |
| £000 | £000 | £000 | £000 | |
Rent charged | – | 640 | 128 | 100 |
Sales of goods and services | – | 419 | 12 | 4 |
– | 1,059 | 140 | 104 |
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 177
Financial Statements
| Country of | Registration | ||
| Name of subsidiary | incorporation | Number | Nature of business |
| Principal operating subsidiaries | |||
Mitchells & Butlers Retail Limited | England and Wales | 00024542 | Leisure retailing |
Mitchells & Butlers Retail (No. 2) Limited | England and Wales | 03959664 | Leisure retailing |
Ha Ha Bar & Grill Limited | England and Wales | 06295359 | Leisure retailing |
Orchid Pubs & Dining Limited | England and Wales | 06754332 | Leisure retailing |
ALEX Gaststätten Gesellschaft mbH & Co KG | Germany | Leisure retailing | |
Pesto Restaurants Ltd | England and Wales | 05162378 | Leisure retailing |
Midco 1 Limited | England and Wales | 05835640 | Property leasing company |
Mitchells & Butlers Leisure Retail Limited | England and Wales | 01001181 | Service company |
Mitchells & Butlers Germany GmbH ac | Germany | Service company | |
Mitchells & Butlers Finance plc | England and Wales | 04778667 | Finance company |
| Other subsidiaries | |||
Mitchells & Butlers (Property) Limited b | England and Wales | 01299745 | Property management |
Standard Commercial Property Developments Limited b | England and Wales | 00056525 | Property development |
Mitchells & Butlers Holdings (No.2) Limited a,b | England and Wales | 06475790 | Holding company |
Mitchells & Butlers Holdings Limited b | England and Wales | 03420338 | Holding company |
Mitchells & Butlers Leisure Holdings Limited b | England and Wales | 02608173 | Holding company |
Mitchells & Butlers Retail Holdings Limited | England and Wales | 04887979 | Holding company |
Ego Restaurants Holdings Limited | England and Wales | 06425958 | Non-trading |
Old Kentucky Restaurants Limited | England and Wales | 00465905 | Trademark ownership |
Mitchells & Butlers (IP) Limited b | England and Wales | 04885717 | Dormant |
Mitchells & Butlers Retail Property Limited a,b | England and Wales | 06301758 | Non-trading |
Mitchells and Butlers Healthcare Trustee Limited b | England and Wales | 04659443 | Healthcare trustee |
ALEX Gaststätten Immobiliengesellschaft mbH c | Germany | Property management | |
ALL BAR ONE Gaststätten Betriebsgesellschaft mbH c | Germany | Leisure retailing | |
ALEX Alsterpavillon Immobilien GmbH & Co KG c | Germany | Property management | |
ALEX Alsterpavillon Management GmbH c | Germany | Management company | |
ALEX Gaststätten Management GmbH c | Germany | Management company | |
Miller & Carter Gaststätten Betriebsgesellschaft mbH c | Germany | Leisure retailing | |
Browns Restaurant (Brighton) Limited d | England and Wales | 01564302 | Dormant |
Browns Restaurant (Bristol) Limited d | England and Wales | 02351724 | Dormant |
Browns Restaurant (Cambridge) Limited d | England and Wales | 01237917 | Dormant |
Browns Restaurant (London) Limited d | England and Wales | 00291996 | Dormant |
Browns Restaurant (Oxford) Limited d | England and Wales | 01730727 | Dormant |
Browns Restaurants Limited d | England and Wales | 01001320 | Dormant |
Lander & Cook Limited d | England and Wales | 11160005 | Dormant |
3Sixty Restaurants Limited e | England and Wales | 07540663 | Holding company |
Section 5 – Other notes continued
Notes to the consolidated financial statements continued
178 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
| Country of | Proportion of | |||||
| incorporation and | ownership | Proportion of voting | ||||
Name of associate | Registered office | operation | Country of operation | Nature of business | interest % | power interest % |
| Fatboy Pub | Ampney House, Falcon Close, | England and | ||||
| Company Limited | Quedgeley, Gloucester, GL2 4LS | Wales | United Kingdom | Leisure retailing | 25 | 25 |
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 179
Financial Statements
Notes
2024
£m
2023
£m
Non-current assets
Investments in subsidiaries 5 1,966 1,866
Amounts owed by subsidiary undertakings 6 384 430
Pension surplus 4 164 –
Deferred tax asset 9 – 10
2,514 2,306
Current assets
Trade and other receivables 6 206 205
Cash and cash equivalents 47 21
253 226
Current liabilities
Pension liabilities 4 (1) (1)
Borrowings 8 (4) (23)
Trade and other payables 7 (427) (315)
(432) (339)
Non-current liabilities
Pension liabilities 4 (24) (21)
Deferred tax liabilities 9 (31) –
(55) (21)
Net assets 2,280 2,172
Equity
Called up share capital 10 51 51
Share premium account 10 357 357
Capital redemption reserve 3 3
Own shares held 10 (9) (5)
Retained earnings 1,878 1,766
Total equity 2,280 2,172
The Company reported a loss for the 52 weeks ended 28 September 2024 of £16m (53 weeks ended 30 September 2023 loss of £16m).
The Company financial statements were approved by the Board and authorised for issue on 26 November 2024.
They were signed on its behalf by:
Tim Jones
Chief Financial Officer
The accounting policies and the notes on pages 182 to 185 form an integral part of these Company financial statements.
Registered Number: 04551498
Mitchells & Butlers plc Company financial statements
Company balance sheet
28 September 2024
180 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Own
shares
held
£m
Retained
earnings
£m
Total
equity
£m
At 24 September 2022 51 357 3 (5) 1,744 2,150
Loss after taxation – – – – (16) (16)
Remeasurement of pension liability – – – – 42 42
Deferred tax on remeasurement of pension liability – – – – (9) (9)
Total comprehensive income – – – – 17 17
Credit in respect of employee share schemes – – – – 5 5
At 30 September 2023 51 357 3 (5) 1,766 2,172
Loss after taxation – – – – (16) (16)
Remeasurement of pension liability – – – – 166 166
Deferred tax on remeasurement of pension liability – – – – (42) (42)
Total comprehensive income – – – – 108 108
Purchase of own shares – – – (7) – (7)
Release of own shares – – – 3 (3) –
Credit in respect of employee share schemes – – – – 7 7
At 28 September 2024 51 357 3 (9) 1,878 2,280
Details of each reserve are provided in note 4.7 to the consolidated financial statements.
Company statement of changes in equity
For the 52 weeks ended 28 September 2024
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 181
Financial Statements
1. Basis of preparation
Basis of accounting
These Company financial statements were prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ as issued
by the FRC.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to IFRS 2
Share-based Payments, requirements of IFRS 7 Financial Instruments: Disclosures, presentation of a cash flow statement, IAS 36 Impairment of
Assets, standards not yet effective and IAS 24 Related Party Disclosures. Where required, equivalent disclosures are given in the consolidated
financial statements.
The Company financial statements have been prepared under the historical cost convention. The Company’s accounting policies have been applied
on a consistent basis to those set out in the relevant notes to the consolidated financial statements.
Share options and share awards are granted to employees of the Mitchells & Butlers Group, by the Company. The Company accounts for share-based
payments, in line with the policy disclosed in note 4.6 of the consolidated financial statements. The Company’s income statement charge in respect of
share-based payments represents the charge for options of employees of the Company. Other companies within the Group are recharged an amount
relating to their employees.
Going concern
The Directors have adopted the going concern basis in preparing these financial statements, as described in section 1 of the consolidated financial
statements.
Accounting judgements and sources of estimation uncertainty
The accounting judgements and estimates of the Company are considered alongside those of the Group. The key judgements and sources of
estimation uncertainty of the Company are: the recognition of the pension surplus described in note 4.5 of the consolidated financial statements;
the determination of appropriate cash flow forecasts for the investment impairment review described in note 5; and the assessment of expected
credit loss on amounts owed by subsidiary undertakings as described in note 6.
Foreign currencies
Transactions in foreign currencies are recorded at the exchange rates ruling on the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are translated into sterling at the relevant rates of exchange ruling at the balance sheet date.
2. Profit and loss account
Profit and loss account
The Company has not presented its own profit and loss account, as permitted by Section 408 of the Companies Act 2006.
The Company recorded a loss after tax of £16m (2023 loss of £16m), less dividends of £nil (2023 £nil).
Audit remuneration
Auditor’s remuneration for audit services to the Company was £30,000 (2023 £30,000). This is borne by another Group company, as are any other
costs relating to non-audit services (see note 2.3 to the consolidated financial statements).
3. Employees and Directors
2024
52 weeks
2023
53 weeks
Average number of employees, including part-time employees 2 2
Employees of Mitchells & Butlers plc consist of Executive Directors who are considered to be the key management personnel of the Company.
Details of employee benefits and post-employment benefits including share-based payments are included within the Report on Directors’
remuneration in the information labelled as audited by KPMG on pages 103 to 110.
The charge recognised for share-based payments in the period is £2m (2023 £1m).
Notes to the Mitchells & Butlers plc
Company financial statements
182 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
4. Pensions
Accounting policy
The accounting policy for pensions is disclosed in the consolidated financial statements in note 4.5.
Pension assets and liabilities
At 28 September 2024 the Company’s pension liability was £25m (2023 £22m). Of this amount, £1m (2023 £1m) is a current liability and £24m
(2023 £21m) is a non-current liability.
At 28 September 2024 the Company’s pension surplus was £164m (2023 £nil).
The Company is the sponsoring employer of the Group’s pension plans. Information concerning the pension scheme arrangements operated by the
Company and associated current and future contributions is contained within note 4.5 to the consolidated financial statements on pages 167 to 171.
The pension amounts and disclosures included in note 4.5 to the consolidated financial statements are equivalent to those applicable for the Company.
5. Investments in subsidiaries
Accounting policy
The Company’s investments in Group undertakings are held at cost less provision for impairment. The value of these investments are reviewed
for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable, or that there is evidence that
past impairments may be reversed. Impairment reviews are performed by comparing the recoverable amount with carrying value. Recoverable
amount is deemed as being either future discounted cash flows where the subsidiary is a trading entity or net asset value where the subsidiary
has no trading assets.
Investments in
subsidiary
undertakings
£m
Cost
At 24 September 2022 3,745
Additions –
At 30 September 2023 3,745
Additions
a
100
At 28 September 2024 3,845
Provision
At 24 September 2022 1,879
Impairment –
At 30 September 2023 1,879
Impairment –
At 28 September 2024 1,879
Net book value
At 28 September 2024 1,966
At 30 September 2023 1,866
At 24 September 2022 1,866
a. During the period the Company subscribed for 1 ordinary share, of £1 nominal value, at a subscription price of £100m each in Mitchells & Butlers Holdings (No.2) Limited
Mitchells & Butlers plc is the beneficial owner of all of the equity share capital of companies within the Group, either itself or through subsidiary
undertakings. In addition, the Company has an indirect investment in an associate company through subsidiary undertakings.
Certain subsidiary companies are exempt from the requirement to prepare individual audited financial statements in respect of the 52 week period
ended 28 September 2024 by virtue of sections 479A and 479C of the Companies Act 2006. In addition, certain other companies are exempt from
the requirement to prepare and file individual financial statements in respect of the 52 week period ended 28 September 2024 by virtue of sections
394A and 448A of the Companies Act 2006.
For further details, see note 5.3 of the consolidated financial statements for a full list of subsidiaries and associates.
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 183
Financial Statements
Notes to the Mitchells & Butlers plc
Company financial statements continued
5. Investments in subsidiaries continued
Impairment review
Investments in trading subsidiaries have been tested for impairment using pre-tax forecast cash flows, discounted by applying a pre-tax discount rate
of 11.00% (2023 11.00%) and a long-term growth rate of 2.0% (2023 2.0%).
The long-term growth rate is based on up-to-date economic data points and for consistency with the overall Group profit forecast. No further impairment
has been recognised as a result of this review in the current or prior period, and there are no triggers to indicate any impairment should be reversed.
For the investment impairment review, judgement has been applied to determine the most appropriate forecast to use as a result of the impact of cost
inflation on site profits. Forecasts for cash flows of trading subsidiaries have been based on the overall Group forecast for FY 2025 to 2027 that was
in place at the balance sheet date. The assumptions are consistent with those used in the impairment review performed at a cash-generating unit level
as disclosed in the consolidated financial statements in note 3.3. The assessment is not sensitive to these key assumptions.
6. Trade and other receivables
2024
£m
2023
£m
Non-current
Amounts owed by subsidiary undertakings 384 383
Defined benefit pension blocked accounts
a
– 47
384 430
2024
£m
2023
£m
Current
Amounts owed by subsidiary undertakings 192 204
Defined benefit pension blocked accounts
a
12 –
Prepayments 2 1
206 205
a. Contributions to the MABEPP scheme have been paid into a blocked account since the scheme buy-in that took place during the year ended 24 September 2022 and are
expected to be repaid following the scheme buy-out (2023 £12m in respect of the MABEPP blocked account and £35m in respect of the MABPP blocked account, since repaid)
(see note 4.5 to the consolidated financial statements for further details).
Amounts owed by subsidiary undertakings are repayable on demand. However, £384m (2023 £383m) of these amounts are disclosed as non-current
as they are not expected to be settled within the next twelve months. Interest is not charged on all balances. Where interest is charged, it is charged at
market rate, based on what can be achieved on corporate deposits.
Critical accounting judgements
Management has applied judgement when assessing the expected credit loss (ECL) on amounts owed by subsidiary undertakings. An assessment
of the future trading cash flows and asset values of the subsidiaries has been made which also considers intercompany transactions between group
companies. As a result of this assessment, no ECL has been recognised in the current period as it is immaterial.
The Directors consider that the carrying value of amounts owed by subsidiary undertakings approximately equates to their fair value.
7. Trade and other payables
Current
2024
£m
2023
£m
Amounts owed to subsidiary undertakings
a
425 313
Accrued charges 1 –
Other payables 1 2
427 315
a. Amounts owed to subsidiary undertakings are repayable on demand. Interest is not charged on all balances. Where interest is charged, it is charged at market rate, based on
what can be achieved on corporate deposits.
184 Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
8. Borrowings
Accounting policy
The accounting policy for borrowings is disclosed in the consolidated financial statements in note 4.1.
Borrowings can be analysed as follows:
2024
£m
2023
£m
Current
Bank overdraft 4 23
Total borrowings 4 23
Unsecured revolving credit facility
The Company holds an uncommitted gross overdraft facility of £50m (2023 £50m) as part of the Group’s notional pooling arrangements with
a net facility limit of £5m (2023 £5m) across the participating Group companies. The amount drawn at 28 September 2024 is £4m (2023 £23m).
9. Taxation
Accounting policy
The accounting policy for taxation is disclosed in the consolidated financial statements in note 2.4.
Deferred tax assets/(liabilities)
Movements in the deferred tax assets and liabilities can be analysed as follows:
£m
At 24 September 2022 19
Charged to other comprehensive income – pensions (9)
At 30 September 2023 10
Charged to income statement – tax losses –
Credited to income statement – pensions 1
Charged to other comprehensive income – pensions (42)
At 28 September 2024 (31)
Analysed as tax timing differences related to:
2024
£m
2023
£m
Pensions (35) 5
Tax losses
a
3 4
Share-based payments 1 1
Deferred tax (liability)/asset (31) 10
a. Tax losses arising in 2008 which are now recoverable by offset against other income.
Further information on the changes to tax legislation are provided in note 2.4 to the consolidated financial statements.
10. Equity
Called up share capital and share premium
Details of the amount and nominal value of called up and fully paid share capital and share premium are contained in note 4.7 to the consolidated
financial statements.
Dividends
Details of the dividends declared and paid by the Company are contained in note 4.7 to the consolidated financial statements.
Own shares held
Details of the amount of own shares held are contained in note 4.7 to the consolidated financial statements.
Strategic Report Governance Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 185
Financial Statements
Alternative performance measures
The performance of the Group is assessed using a number of Alternative Performance Measures (APMs).
The Group’s results are presented both before and after separately disclosed items. Adjusted profit measures are presented excluding separately
disclosed items as we believe this provides both management and investors with useful additional information about the Group’s performance and
supports an effective comparison of the Group’s trading performance from one period to the next. Adjusted profit measures are reconciled to
unadjusted IFRS results on the face of the income statement with details of separately disclosed items provided in note 2.2.
The Group’s results are also described using other measures that are not defined under IFRS and are therefore considered to be APMs. These APMs
are used by management to monitor business performance against both shorter-term budgets and forecasts but also against the Group’s longer-term
strategic plans.
FY 2023 was a 53-week period, in order to aid comparability, we have provided a 52-week result. The 52-week result is derived by removing the 53rd
week of the financial year. FY 2024 was a 52-week year.
APMs used to explain and monitor Group performance include:
APM Definition Source
EBITDA Earnings before interest, tax, depreciation and amortisation, before movements
in the valuation of the property portfolio.
Group income statement
Adjusted EBITDA EBITDA before separately disclosed items is used to calculate net debt to EBITDA. Group income statement
52-week Adjusted EBITDA EBITDA on a 52-week basis, adjusted to remove the 53rd week of the period,
before separately disclosed items is used to calculate net debt to EBITDA.
APM D
Operating profit Earnings before interest and tax. Group income statement
Adjusted operating profit Operating profit before separately disclosed items. Group income statement
52-week adjusted operating profit Operating profit before separately disclosed items adjusted to remove the 53rd
week of the period.
APM B
52-week revenue Revenue adjusted to remove the 53rd week of the year. APM B
Like-for-like sales growth Like-for-like sales growth reflects the sales performance against the comparable
period in the prior year of UK managed pubs, bars and restaurants that were
trading in the two periods being compared, unless marketed for disposal.
APM A
52-week like-for-like sales growth Like-for-like sales growth reflects the sales performance against the comparable
period in the prior year of UK managed pubs, bars and restaurants that were
trading in the two periods being compared, unless marketed for disposal.
Adjusted to remove 53rd week of the period.
APM A
Adjusted earnings per share (EPS) Earnings per share using profit before separately disclosed items. Note 2.5
52- week adjusted earnings per
share (EPS)
Earnings per share using profit before separately disclosed items adjusted
for 53rd week of period.
APM C
Net debt Net debt comprises cash and cash equivalents, cash deposits net of borrowings
and discounted lease liabilities. Presented on a constant currency basis due to
the inclusion of the fixed exchange rate component of the cross currency swap.
Note 4.4
Net debt : Adjusted EBITDA The multiple of net debt including lease liabilities, as per the balance sheet
compared against 52-week EBITDA before separately disclosed items, which
is a widely used leverage measure in the industry.
APM D
Net debt : Adjusted 52-week
EBITDA
The multiple of net debt including lease liabilities, as per the balance sheet
compared against 52-week EBITDA before separately disclosed items, which is a
widely used leverage measure in the industry. Adjusted for 53rd week of the period.
APM D
FY 2023 52-week reconciliation A 53-week accounting period occurs every five years. FY 2023 was a 53-week
period and therefore presentation of a 52-week basis provides useful
comparability to previous financial years.
APM E
Return on capital Return generating capital includes investments made in new sites and investment
in existing assets that materially changes the guest offer. Return on investment
is measured by incremental site EBITDA following investment expressed as a
percentage of return generating capital. Incremental EBITDA reflects the increase
in profit following investment, with the pre-investment profit being measured as
the average annual profit prior to investment. Return on investment is measured
for four years following investment. Measurement commences three periods
following the opening of the site.
APM F
186 Annual Report and Accounts 2024 Mitchells & Butlers plc
Other Information
A. Like-for-like sales
The sales this year compared to the sales in the previous year of all UK managed sites that were trading in the two periods being compared, expressed
as a percentage. This widely used industry measure provides better insight into the trading performance than total revenue which is impacted by
acquisitions and disposals. Like-for-like sales is provided on a 52-week basis.
Source
2024
£m
2023
£m
Year-on-year
%
Reported revenue Income statement 2,610.0 2,503.0 4.3%
Adjust for 53rd week APM E – (44.0) –
Less 52-week non like-for-like sales and income (254.1) (221.2) (14.9%)
52-week like-for-like sales 2,355.9 2,237.8 5.3%
Drink sales
Source
2024
£m
2023
£m
Year-on-year
%
Reported drink revenue Note 2.3 1,132.0 1,092.0 3.7%
Adjust for 53rd week – (20.0) –
Less 52-week non like-for-like drink sales (95.0) (83.7) (13.5%)
52-week drink like-for-like sales 1,037.0 988.3 4.9%
Food sales
Source
2024
£m
2023
£m
Year-on-year
%
Reported food revenue Note 2.3 1,385.0 1,323.0 4.7%
Adjust for 53rd week – (23.0) –
Less 52-week non like-for-like food sales (141.7) (119.6) (18.5%)
52-week food like-for-like sales 1,243.3 1,180.4 5.3%
Other sales
Source
2024
£m
2023
£m
Year-on-year
%
Reported other revenue Note 2.3 93.0 87.8 5.9%
Adjust for 53rd week – (1.5) –
Less non like-for-like other sales (17.4) (17.2) 1.2%
52 week other like-for-like sales 75.6 69.1 9.4%
B. Adjusted operating profit
Operating profit before separately disclosed items as set out in the Group Income Statement. Separately disclosed items are those which are
separately identified by virtue of their size or nature. Excluding these items allows a more effective comparison of the Group’s trading performance
from one period to the next.
Source
2024
£m
2023
£m
Year-on-year
%
Operating profit Income statement 300 98 206.1%
Separately disclosed items Income statement 12 128 90.6%
Adjusted operating profit Income statement 312 226 38.1%
Adjusted operating profit 53rd week APM E – (5) –
52-week adjusted operating profit 312 221 41.2%
Reported revenue Income statement 2,610 2,503 4.3%
Revenue 53rd week APM E – (44) –
52-week revenue 2,610 2,459 6.1%
52-week adjusted operating margin 12.0% 9.0% 3.0ppts
Strategic Report Governance Financial Statements
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 187
Other Information
Alternative performance measures continued
C. Adjusted earnings/(loss) per share
Earnings per share using profit before separately disclosed items. Separately disclosed items are those which are separately identified by virtue
of their size or nature. Excluding these items allows a more effective comparison of the Group’s trading performance from one period to the next.
Source
2024
£m
2023
£m
Year-on-year
%
Profit/(loss) for the period Income statement 149 (4) 3825.0%
Add back separately disclosed items Income statement 8 100 (92.0%)
Adjusted profit 157 96 63.5%
Adjusted profit 53rd week – (3)
52-week adjusted profit 157 93 68.8%
Basic weighted average number of shares Note 2.5 595 595 -%
Adjusted earnings per share 26.4p 16.1p –
52-week adjusted earnings per share 26.4p 15.6p 69.2%
D. Net Debt: 52-week adjusted EBITDA
The multiple of net debt as per the balance sheet compared against 52-week EBITDA before separately disclosed items which is a widely used
leverage measure in the industry. From FY 2020, leases are included in net debt following adoption of IFRS 16. Adjusted 52-week EBITDA is used for
this measure to prevent distortions in performance resulting from separately disclosed items.
Source
2024
£m
2023
£m
Year-on-year
%
Net Debt including leases Note 4.4 1,436 1,633 (12.1%)
EBITDA Income statement 444 362 22.1%
Add back separately disclosed items Income statement (2) (3) (166.7%)
EBITDA 53rd week APM E – (7) –
Adjusted 52-week EBITDA 442 352 26.1%
Net debt : Adjusted 52-week EBITDA 3.2 4.6
E. FY 2023 52-week reconciliation
A 53-week accounting period occurs every five years. FY 2023 was a 53-week period and therefore presentation of a 52-week basis provides useful
comparability to previous financial years.
Source
2023
52 weeks
2023
Week 53
2023
53 weeks
Revenue Income statement £2,459m £44m £2,503m
Adjusted EBITDA Income statement £352m £7m £359m
Adjusted operating profit Income statement £221m £5m £226m
Adjusted PBT Income statement £112m £3m £115m
Adjusted profit for the period Income statement £93m £3m £96m
Adjusted EPS Income statement 15.6p 0.5p 16.1p
188 Annual Report and Accounts 2024 Mitchells & Butlers plc
Other Information
F. Return on capital
Return generating capital includes investments made in new sites and investment in existing assets that materially changes the guest offer. Return
on investment is measured by incremental site EBITDA following investment expressed as a percentage of return generating capital. Return on
investment is measured for four years following investment. Measurement of return commences three periods following the opening of the site.
Return on expansionary capital
Source
2023
FY 2020–23
£m
2024
FY 2021–23
£m
2024
FY 2024
£m
2024
Total
£m
Maintenance and infrastructure 158 120 58 178
Remodel – refurbishment 188 134 69 203
Non-expansionary capital 346 254 127 381
Remodel expansionary 9 6 2 8
Conversions and acquisitions
a
25 27 16 43
Expansionary capital for return calculation 34 33 18 51
Expansionary capital open < 3 periods pre year end 40 1 6 7
Freehold purchases 23 3 26
Total capital 52-week Cash flow 420 311 154 465
Adjusted 52-week EBITDA Income statement 1,146 893 444 1,337
Non-incremental EBITDA 1,140 886 441 1,327
Incremental EBITDA 6.2 7.0 2.7 9.7
Return on expansionary capital 19% 21% 15% 19.1%
a. Conversion and acquisition capital is net of capex incurred for projects which have been open for less than three periods pre year end.
Strategic Report Governance Financial Statements
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024 189
Other Information
Shareholder information
Contacts
Registered office
27 Fleet Street
Birmingham B3 1JP
Telephone 0121 498 4000
Registered in England No. 4551498
Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone +44 (0) 371 384 2065*
For deaf and speech impaired customers, we welcome calls via Relay UK.
Please see www.relayuk.bt.com for more information.
www.mbplc.com/investors/contacts/
* Lines are open 8.30am to 5.30pm (UK time), Monday to Friday, excluding public
holidays in England & Wales.
Key dates
These dates are indicative only and may be subject to change.
Annual General Meeting January 2025
Announcement of interim results May 2025
Pre-close trading update September 2025
2025 final results announcement November 2025
In line with our sustainability strategy to lessen the negative impact of
our business, we have reduced the number of Annual Reports we have
printed this year. Once that supply is exhausted, we will not print any
further copies, though the Annual Report will be available on our website
and can be printed from there if required, using the following link:
www.mbplc.com/investors/annualreport
190 Annual Report and Accounts 2024 Mitchells & Butlers plc
Other Information
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Mitchells & Butlers plc
Tel: +44 (0)121 498 4000
Company Number: 4551498