REG - Mitchells & Butlers - Half Year Results
Thu 07:00
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RNS Number : 6802J Mitchells & Butlers PLC 22 May 2025
MITCHELLS & BUTLERS PLC
LEI no: 213800JHYNDNB1NS2W10
22 May 2025
HALF YEAR RESULTS
(For the 28 weeks ended 12 April 2025)
Highlights
- Strong trading performance with like-for-like sales(a) growth of 4.3% over the
first half
- Operating profit of £181m up 10.4% from prior half-year
- Operating margin increased to 12.4% (HY 2024 11.7%)
- Full year operating profit expected to be at the top end of current consensus
Reported results
- Total revenue of £1,454m (HY 2024 £1,396m)
- Operating profit of £181m (HY 2024 £164m)
- Profit before tax of £134m (HY 2024 £108m)
- Basic earnings per share of 16.8p (HY 2024 13.6p)
Trading results
- Adjusted operating profit(a) £181m (HY 2024 £164m)
- Adjusted earnings per share(a) of 16.8p (HY 2024 13.6p)
Balance sheet and cash flow
- Cash inflow before bond amortisation of £131m (HY 2024 £137m)
- Net debt(a) reduced to £860m (HY 2024 £1,037m), excluding £438m of IFRS 16
lease liabilities (HY 2024 £449m)
Phil Urban, Chief Executive, commented:
"The strength of our first half performance is driven by continued focus on
maximising the guest appeal of our diverse portfolio of brands to drive sales,
supported by efficiency initiatives delivered through our Ignite programme of
work. We are delighted with the like-for-like sales(a) performance which
continues to outperform against the market(b).
As we enter the second half of the year, with increased employer national
insurance contributions, we remain focused on the effective delivery of our
Ignite programme of initiatives and our capital investment programme, driving
further cost efficiencies and increased sales. Notwithstanding a likely
increase in cost headwinds next year, we have confidence that relentless focus
on delivery of our strategic priorities will generate further value from our
well invested and strategically located estate portfolio and compelling
customer offers."
Definitions
a - The Directors use a number of alternative performance measures (APMs) that
are considered critical to aid the understanding of the Group's performance.
APMs are explained later in this announcement.
b - As measured by the CGA Business Tracker.
There will be a presentation held today at 8:30am accessible by phone on 020
3807 9124, access code: 699179 and at
https://www.netroadshow.com/events/login?show=2c5d75e9&confId=81719
The slides will also be available on the website at www.mbplc.com
(http://www.mbplc.com) The replay will then be available at
https://www.mbplc.com/hy2025/analystspresentation
(https://www.mbplc.com/hy2025/analystspresentation) .
All disclosed documents relating to these results are available on the Group's
website at www.mbplc.com (http://www.mbplc.com)
For further information, please contact:
Tim Jones - Chief Financial Officer +44 (0)121 498 6112
Amy de Marsac - Investor Relations +44 (0)121 498 6514
James Murgatroyd (FGS Global) +44 (0)20 7251 3801
Jenny Bahr (FGS Global) +44 (0)20 7251 3801
Note for editors:
Mitchells & Butlers is a leading operator of managed restaurants and pubs.
Its portfolio of brands and formats includes Harvester, Toby Carvery, All Bar
One, Miller & Carter, Premium Country Pubs, Sizzling Pubs, Stonehouse,
Vintage Inns, Browns, Castle, Nicholson's, O'Neill's, Ember Inns, Ego
Restaurants and Pesto. In addition, it operates Innkeeper's Collection hotels
in the UK and Alex restaurants and bars in Germany. Further details are
available at www.mbplc.com and supporting photography can be downloaded at
www.mbplc.com/imagelibrary (http://www.mbplc.com/imagelibrary) .
CURRENT TRADING AND OUTLOOK
We traded strongly through the first half of the year with like-for-like
sales(a) growth of 4.3% built on strong performances, ahead of the market(b),
through the brand portfolio and supported by broadly flat volumes. Combined
with disciplined cost control and further Ignite efficiencies this delivered
over 10 per cent growth in operating profit to £181m (HY 2024 £164m).
Over the most recent 10 weeks, to include both Easter and Mother's Day in each
year, like-for-like sales(a) have grown by 6.0%. Looking forward we expect
the market to remain robust and believe we are well placed to continue to
outperform.
Our guidance on cost headwinds for the current financial year remains
unchanged, with an anticipated increase of c.£100m before mitigation,
representing c.5% of our cost base, driven primarily by labour costs including
increases to both the statutory National Living Wage and employer national
insurance contributions which will impact from the second half. Looking
forward to FY26, we will have annualisation of labour cost increases, plus
further increases in statutory thresholds which we would expect to exceed the
general level of inflation. These, combined with recent indications of high
increases in food costs, notably meat, lead us to anticipate a higher level of
overall inflation next year, probably approaching £130m, representing
slightly less than 6% of our cost base before mitigation.
Notwithstanding future cost increases we believe that the business remains in
good shape, supported by a balance sheet that continues to strengthen, with
reduced debt and a substantially de-risked pension surplus. We expect to
deliver profits at the top end of consensus for the current year.
BUSINESS REVIEW
Total sales across the period were £1,454m reflecting 4.2% growth on HY 2024.
Like-for-like sales(a) increased by 4.3% with strong performances through the
brand portfolio. Operating profit of £181m reflected 10.4% growth on last
half-year (HY 2024 £164m) and a 0.7ppt increase in operating margin to 12.4%.
We made a good start to the year with like-for-like sales(a) growth of 4.0%
over the first seven weeks. Performance over the important three-week festive
period was particularly strong with like-for-like sales(a) growth of 10.4%.
Across the first quarter as a whole, like-for-like sales(a) remained well
ahead of the market(a), growing by 3.9% despite the notable adverse, albeit
temporary, impact of very cold and stormy weather over the last couple of
weeks of the quarter.
Sales remained resilient through the second quarter aided by good weather in
late March, and with a particularly strong performance on Mother's Day.
Across the quarter, we recorded like-for-like sales(a) growth of 4.7%,
comprising drink sales growth of 5.1% and food sales growth of 3.6%.
We have continued to consistently outperform the market(b), as represented by
the CGA Business tracker, by over 3% over the first half. Across the market
segments reported on by CGA Business tracker, Pubs and Pub Restaurants have
seen the highest sales growth over the first half, benefitting from the warm
weather in March and April. The Restaurant segment of the market has
delivered broadly flat sales across the period, which we have consistently
outperformed. Bars across the market have reported sales decline over the
first half, with the late-night market being particularly challenged. This is
the segment that we have least exposure to, but again we have outperformed
significantly, with our offers appealing across a range of occasions with less
exposure to late-night trade.
Overall current year cost inflation remains in line with previous guidance at
£100m, driven primarily by increased labour costs and with a stabilisation of
energy costs in particular. Strong and resilient sales growth combined with
effective delivery of our Ignite and capital programmes has driven an increase
in both profitability and margins.
Supply across the sector largely stabilised by the end of 2024. However, as
the industry faces a new wave of cost headwinds there is renewed likelihood of
supply contraction. In the three months to March 2025 there was an average of
20 net closures a week with food-led sites being particularly impacted (CGA
AlixPartners Hospitality Market Monitor April 2025).
OUR STRATEGIC PRIORITIES
Our strategy, based on three key pillars, has provided the foundation for our
ongoing performance. We focus on maximising the value generated from our 82%
freehold and long leasehold estate, utilising the diversity of our brand
portfolio to grow market share with appeal across a broad range of consumer
occasions, demographics and locations. Our range of brands is a particular
strength during times of uncertainty, with familiar brands to suit a wide
range of occasions, offering guests the opportunity to adapt their eating out
choices to meet their needs.
Our Ignite programme of work remains a key focus for the business and is at
the core of our long-term value creation. We currently have around 40
initiatives underway across a range of areas, all focused on driving sales and
delivering cost efficiencies. Our initiatives focus on enhancing guest
experience in a variety of ways and continue to reap rewards, reflected in
sustained like-for-like sales(a) growth as well as continued market
outperformance on guest review scores, which averaged 4.6 out of 5 over the
first half. We now have a new workstream focused on our drinks offer, from
optimum font positioning, to perfect serve to cellar practices. In recent
years, we have focused on the food element of our offers, and we believe there
is significant opportunity in developing our drinks offers to the same high
standard.
Enhancing productivity and efficiency to help mitigate inflationary costs
remains an important focus and we have a number of initiatives in place
designed to improve efficiency including our labour scheduling system and
auto-order technology. Employee engagement and low turnover are important
elements supporting team efficiency. Therefore, to enhance our employee
experience, we have launched an employee app providing a single portal to
access benefits and pay slips. The app also provides a direct route of
communication from the brand designed to enhance engagement behind incentives
and 'calls to action' which will increase productivity over time.
Following the successful trial of the use of remote control in-site energy
systems which have delivered energy consumption savings we have begun the roll
out of this technology across our estate. 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. Our energy initiatives help us to improve efficiency whilst
also supporting our sustainability objectives.
Our capital programme continues to deliver significant value through improving
the competitive position of our pubs and restaurants within their local
markets. Enhancing the effectiveness of delivery of the programme has also
been an area of Ignite focus, ensuring optimisation of closure and re-opening
timing, streamlining of costs and rigorous analysis of post-investment
performance. Over the first half, we completed 95 investment projects
comprising 87 remodels, 5 conversions and 3 acquisitions. We are generating
strong returns, currently in excess of 35% on remodels, justifying an
increasing allocation of capital to this area as we look to re-establish an
average 7 year investment cycle.
PEOPLE
Our people are fundamental to the delivery of great experiences for our
guests. We are delighted that engagement scores have continued to improve
across all employee groups in the first half of the year, representative of
the commitment of our teams to work together to drive the future success of
the business. Pleasingly, turnover has also continued to improve, reaching
record lows during the first half of FY 2025. The continued progress on our
people measures, despite the challenging recruitment environment, is testament
to our success in attracting the best talent, enhancing performance through
our development programmes and retaining teams through progression
opportunities.
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 and 3
- Zero operational waste to landfill by 2030
- 50% reduction in food waste by 2030
We remain focused on working towards our sustainability goals, with numerous
initiatives underway to support these ambitions and we were delighted to again
receive the award for the Most Sustainable Pub Company at this year's Publican
Awards. During the first half we have continued to invest in sustainability
capital, we now have 180 sites with solar panels, and significant further
opportunity to grow our production of renewable energy. We have electrified
74 kitchens, reducing our reliance on gas for cooking, and have fully removed
gas in 5 sites taking the learnings from these projects forward to expand the
removal of gas in the coming years. In addition, we are investing in
technology which allows us to remotely control high energy consumption
equipment across the estate, opening up the opportunity for energy consumption
savings without requiring intervention from our teams. Our teams are vital to
the delivery of progress in other areas, for example our ambition to increase
recycling rates is dependent on our teams effectively segregating waste. We
provide support for these types of initiatives through our dedicated network
of sustainability ambassadors, as well as centrally developed online training.
We know that our people are passionate about improving the environmental
impact of our business and are pleased to deliver continued progress in this
area further enhancing our employer proposition.
FINANCIAL REVIEW
On a statutory basis, profit before tax for the half year was £134m (HY 2024
£108m), on sales of £1,454m (HY 2024 £1,396m).
The Group Income Statement discloses adjusted profit and earnings per share
information that excludes separately disclosed items, disclosed 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.
HY 2025 HY 2024
£m £m
Revenue 1,454 1,396
Operating profit 181 164
Profit before tax 134 108
Earnings per share 16.8 13.6p
Operating margin 12.4% 11.7%
At the end of the period, the total estate comprised 1,723 sites in the UK and
Germany of which 1,653 are directly managed.
Revenue
Total revenue of £1,454m (HY 2024 £1,396m) reflects a strong period of
trading with sustained like-for-like sales(a) growth across the brand
portfolio.
Like-for-like sales(a) in the first half increased by 4.3%, comprising an
increase in like-for-like food sales(a) of 3.8% and of like-for-like drink
sales(a) of 4.3% driven by strengthening spend per head. Volumes of both
food and drink were broadly flat across the first half.
Like-for-like sales(a):
Weeks 1-15 Weeks 16-28 Weeks 1-28
Q1 Q2 H1
Food 4.0% 3.6% 3.8%
Drink 3.6% 5.1% 4.3%
Total 3.9% 4.7% 4.3%
Over the most recent 10 weeks, to include both Easter and Mother's Day in each
year, like-for-like sales(a) have grown by 6.0%.
Separately disclosed items
There were no separately disclosed items recognised in the period.
Operating profit and margins(a)
Adjusted operating profit(a) for the first half was £181m (HY 2024 £164m),
an increase of 10.4% on the first half of the previous year.
Adjusted operating margin of 12.4%, 0.7ppts higher than last year driven by
strong like-for-like sales(a) growth and operating efficiencies.
We continue to expect cost headwinds for this year of £100m before
mitigation, representing c.5% of our cost base, driven primarily by labour
costs including increases to the statutory National Living Wage and an
increase in employer national insurance contributuions which will impact
from the second half. Looking forward to FY26 we will have annualisation of
labour cost increases, plus further increases in statutory thresholds which we
would expect to exceed the general level of inflation. These, combined with
recent indications of high increases in food costs, notably meat, lead us to
anticipate a higher level of overall inflation probably approaching £130m,
representing slightly less than 6% of our cost base before mitigation.
Interest
Net finance costs of £50m (HY 2024 £55m) for the half year were £5m lower
than the same period last year. The net pensions finance income of £3m (HY
2024 charge £1m) reflects the surplus funding position now recognised on the
balance sheet.
Earnings per share
Basic and adjusted earnings per share were 16.8p (HY 2024 13.6p basic and
adjusted earnings per share(a)).
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 599m.
Cash flow
HY 2025 HY 2024
£m £m
EBITDA 252 233
Non-cash share-based payment and pension costs and other 9 5
Operating cash flow before movements in working capital and pension 261 238
contributions
Working capital movement 30 27
Pension escrow return 12 35
Pension contributions (1) (1)
Cash flow from operations 302 299
Capital expenditure (92) (81)
Net finance lease principal payments (22) (20)
Interest on lease liabilities (9) (8)
Net interest paid (37) (42)
Purchase of own shares (2) (3)
Tax (10) (8)
Other 1 -
Net cash flow before bond amortisation 131 137
Mandatory bond amortisation (64) (61)
Net cash flow 67 76
This was a strong period of cash generation, built on EBITDA increased as a
result of an improved trading performance to £252m, a pension escrow return
of £12m which was received during the period (HY 2024 £35m) and the use of
tax losses incurred over the pandemic to temporarily reduce cash tax paid.
Capital expenditure increased to £92m (HY 2025 £81m) with reduced impact of
external delays allowing us to extend the number of completed projects, with
an increasing allocation of capital to this area being justified by strong
returns.
After all outgoings, including mandatory bond amortisation of £64m (including
net impact of currency swaps), cash inflow was £67m (HY 2024 £76m).
Capital expenditure
Capital expenditure of £92m (HY 2024 £81m) comprises £89m from the purchase
of property, plant and equipment and £3m in relation to the purchase of
intangible assets.
HY 2025 HY 2024
£m # £m #
Maintenance and infrastructure ( ) 33 29
Remodels - refurbishment 45 87 35 78
Conversions 8 5 5 4
Acquisitions - freehold 4 2 10 2
Acquisitions - leasehold 2 1 2 1
Total return generating capital expenditure 59 95 52 85
Total capital expenditure 92 81
Maintenance and infrastructure spend included investments towards our
sustainability ambitions, such as further installations of solar panels and
control sensors, and electrification of kitchens. Investment in these areas
was slightly higher than the prior period.
Project numbers have increased in the period as we remain committed to
resumption of an average seven-year refurbishment cycle across our estate,
justified by the strong returns we are generating in this area of over 35% on
remodels.
Pensions
In the prior period the Trustees of the Mitchells & Butlers Executive
Pension Plan (MABEPP) completed a full scheme buy-out of the liabilities of
the plan. Subsequent to that, and in the current period, the scheme has been
wound up with all escrow monies repaid and a surplus cash balance of £3m
transferring to the Mitchells & Butlers Pension Plan (MABPP).
Over the course of 2024, the Trustees of MABPP resolved that any surplus
arising in that plan can be used to pay for the employer contributions to the
defined contribution section of MABPP. During the period, the MABPP surplus
has funded the settlement of £6m of the Company's employer contributions,
AVC's in respect of prior year bonus payments and death in service benefits.
One further scheme remains. This is closed and unfunded and has estimated
liabilities of £21m.
Net debt and facilities
On the back of a strong cash performance, net debt(a) at the period end
reduced to £1,298m, comprised of £860m non-lease liabilities and lease
liabilities of £438m (HY 2024 £1,486m comprised of £1,037m non-lease
liabilities and lease liabilities of £449m). This represents a multiple of
2.8 times EBITDA over the last year including lease liabilities (1.9 times
excluding these liabilities).
In addition to the securitisation the Group has a £200 million committed
unsecured facility, expiring in July 2026. Further details of existing debt
arrangements and an analysis of net debt can be found in Note 10 to the
financial statements and at https://www.mbplc.com/infocentre/debtinformation/
(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 Note 1.
Director's responsibility statement
We confirm that to the best of our knowledge:
- The condensed set of financial statements has been prepared in accordance with
IAS 34 'Interim Financial Reporting' as required by DTR 4.2.4R and to the best
of their knowledge gives a true and fair view of the information required by
DTR 4.2.4R;
- The interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first 28
weeks and description of principal risks and uncertainties for the remaining
24 weeks of the year); and
- The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
This responsibility statement was approved by the Board of Directors on 21 May
2025 and is signed on its behalf by:
Tim Jones
Chief Financial Officer
21 May 2025
Definitions
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 later in this announcement.
b - As measured by the CGA Business Tracker.
GROUP CONDENSED INCOME STATEMENT
for the 28 weeks ended 12 April 2025
2025 2024 2024
28 weeks 28 weeks 52 weeks
(Unaudited) (Unaudited) (Audited)
Before separately disclosed items(a) Before separately disclosed items(a) Before separately disclosed items(a)
Total Total Total
Notes £m £m £m £m £m £m
Revenue 3 1,454 1,454 1,396 1,396 2,610 2,610
Operating costs before depreciation, amortisation and movements in the (1,202) (1,202) (1,163) (1,163) (2,168) (2,168)
valuation of the property portfolio
Net profit arising on property disposals - - - - - 2
EBITDA(b) before movements in the valuation of the property portfolio 252 252 233 233 442 444
Depreciation, amortisation and movements in the valuation of the property (71) (71) (69) (69) (130) (144)
portfolio
Operating profit 181 181 164 164 312 300
Finance costs 5 (55) (55) (60) (60) (109) (109)
Finance income 5 5 5 5 5 10 10
Net pensions finance income/ (charge) 3 3 (1) (1) (2) (2)
5,11
Profit before tax 134 134 108 108 211 199
Tax charge (34) (34) (27) (27) (54) (50)
6
Profit for the period 100 100 81 81
157 149
Earnings per ordinary share:
7
Basic 16.8p 16.8p 13.6p 13.6p 26.4p 25.0p
Diluted 16.7p 16.7p 13.5p 13.5p 26.2p 24.8p
a. Separately disclosed items are explained and analysed in note 4.
b. Earnings before interest, tax, depreciation, amortisation and movements in the
valuation of the property portfolio.
All results relate to continuing operations.
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the 28 weeks ended 12 April 2025
2025 2024 2024
28 weeks 28 weeks 52 weeks
Notes £m £m £m
(Unaudited) (Unaudited) (Audited)
Profit for the period 100 81 149
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain on revaluation of the property portfolio - - 254
Remeasurement of pension liabilities 11 (16) 1 166
Tax relating to items not reclassified 6 4 - (116)
(12) 1 304
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations - - -
Cash flow hedges:
- Gains/(losses) arising during the period 14 (18) (34)
- Reclassification adjustments for items included in profit or loss - 3 11
Tax relating to items that may be reclassified 6 (4) 4 6
10 (11) (17)
Other comprehensive (expense)/income after tax (2) (10) 287
Total comprehensive income for the period 98 71 436
GROUP CONDENSED BALANCE SHEET
12 April 2025 2025 2024 2024
12 April 13 April 28 September
Notes £m £m £m
ASSETS (Unaudited) (Unaudited) (Audited)
Goodwill and other intangible assets 8 21 16 20
Property, plant and equipment 8 4,451 4,114 4,419
Right-of-use assets 9 302 316 307
Finance lease receivables 10 11 11
Other receivables 11 - 12 -
Pension surplus 11 141 - 164
Deferred tax asset 3 4 3
Derivative financial instruments 12 19 28 19
Total non-current assets 4,947 4,501 4,943
Inventories 28 27 27
Trade and other receivables 73 92 98
Finance lease receivables 2 1 1
Derivative financial instruments 12 1 2 -
Cash and cash equivalents 10 253 194 176
Total current assets 357 316 302
Total assets 5,304 4,817 5,245
LIABILITIES
Pension liabilities 11 (1) (1) (1)
Trade and other payables (492) (489) (482)
Current tax liabilities (2) (2) (1)
Borrowings 10 (156) (140) (143)
Lease liabilities 9 (42) (42) (33)
Derivative financial instruments 12 (2) - (2)
Total current liabilities (695) (674) (662)
Pension liabilities 11 (21) (22) (24)
Other payables (8) - (8)
Borrowings 10 (976) (1,120) (1,041)
Lease liabilities 9 (396) (407) (414)
Derivative financial instruments 12 (15) (21) (27)
Deferred tax liabilities (514) (363) (491)
Provisions (12) (9) (12)
Total non-current liabilities (1,942) (1,942) (2,017)
Total liabilities (2,637) (2,616) (2,679)
Net assets 2,667 2,201 2,566
EQUITY
Called up share capital 51 51 51
Share premium account 358 357 357
Capital redemption reserve 3 3 3
Revaluation reserve 1,143 951 1,143
Own shares held (7) (5) (9)
Hedging reserve (11) (15) (21)
Translation reserve 14 14 14
Retained earnings 1,116 845 1,028
Total equity 2,667 2,201 2,566
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the 28 weeks ended 12 April 2025
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 30 September 2023 (Audited) 51 357 3 951 (5) (4) 14 763 2,130
- - - - - - - 81 81
Profit for the period
Other comprehensive income/(expense) - - - - - (11) - 1 (10)
Total comprehensive (expense)/income - - - - - (11) - 82 71
Purchase of own shares - - - - (3) - - - (3)
Release of own shares - - - - 3 - - (3) -
Credit in respect of share-based payments - - - - - - - 3 3
At 13 April 2024 51 357 3 951 (5) (15) 14 845 2,201
(Unaudited)
Profit for the period - - - - - - - 68 68
Other comprehensive (expense)/income - - - 192 - (6) - 111 297
Total comprehensive (expense)/income - - - 192 - (6) - 179 365
Purchase of own shares - - - - (4) - - - (4)
Release of own shares - - - - - - - - -
Credit in respect of share-based payments - - - - - - - 3 3
Tax on share based payments 1 1
At 28 September 2024 (Audited) 51 357 3 1,143 (9) (21) 14 1,028 2,566
Profit for the period - - - - - - - 100 100
Other comprehensive income /(expense) - - - - - 10 - (12) (2)
Total comprehensive income - - - - - 10 - 88 98
Share capital issued - 1 - - - - - - 1
Purchase of own shares - - - - (2) - - - (2)
Release of own shares - - - - 4 - - (4) -
Credit in respect of share-based payments - - - - - - - 4 4
At 12 April 2025 51 358 3 1,143 (7) (11) 14 1,116 2,667
(Unaudited)
GROUP CONDENSED CASH FLOW STATEMENT
for the 28 weeks ended 12 April 2025
2025 2024 2024
28 weeks 28 weeks 52 weeks
Notes £m £m £m
Cash flow from operations (Unaudited) (Unaudited) (Audited)
Operating profit 181 164 300
Add back/(deduct):
Movement in the valuation of the property portfolio - - 14
Net profit arising on property disposals - - (2)
Depreciation of property, plant and equipment 8 51 49 92
Amortisation of intangibles 1 2 4
Depreciation of right-of-use assets 9 19 18 34
Cost charged in respect of share-based payments 4 3 7
Administrative pension costs 11 2 2 5
Utilisation of pension surplus for DC contributions 3 - -
Operating cash flow before movements in working capital and pension 261 238 454
contributions
Increase in inventories (1) (2) (1)
Decrease in trade and other receivables 26 50 44
Increase in trade and other payables 17 14 8
Decrease in provisions - - (1)
Pension contributions 11 (1) (1) (1)
Cash flow from operations 302 299 503
Interest payments (43) (50) (96)
Interest receipts on interest rate swap - 2 3
Interest receipts on cross currency swap 3 4 7
Interest payments on cross currency swap (2) (3) (5)
Other interest paid - lease liabilities (9) (8) (17)
Interest received 5 5 9
Tax paid (10) (8) (18)
Net cash from operating activities 246 241 386
Investing activities
Acquisition of Pesto Restaurants Ltd - - (2)
Purchases of property, plant and equipment (89) (80) (152)
Purchases of intangible assets (3) (1) (2)
Net proceeds from sale of property, plant and equipment - - 1
Finance lease principal repayments received 1 1 1
Net cash used in investing activities (91) (80) (154)
Financing activities
Issue of ordinary share capital 1 - -
Purchase of own shares (2) (3) (7)
Repayment of principal in respect of securitised debt 10 (67) (64) (128)
Principal receipts on currency swap 10 11 11 21
Principal payments on currency swap 10 (8) (8) (16)
Cash payments for the principal portion of lease liabilities (23) (21) (41)
Repayment of other borrowings - ) - (1)
Short term financing of employee advances 10 - - 2
Net cash used in financing activities (88) (85) (170)
Net increase in cash and cash equivalents 10 67 76 62
Cash and cash equivalents at the beginning of the period 10 164 103 103
Foreign exchange movements on cash 1 - (1)
Cash and cash equivalents at the end of the period 10 232 179 164
Cash and cash equivalents are defined in note 10.
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. GENERAL INFORMATION
Basis of preparation
Mitchells & Butlers Plc (the Company) is a company domiciled in the UK.
These condensed consolidated interim financial statements (interim financial
statements) as at and for the 28 weeks ended 12 April 2025 comprise the
Company and its subsidiaries (together referred to as the Group). The Group is
primarily involved in the hospitality industry providing guests with memorable
occasions serving food and drink across a range of restaurants, pubs and bars.
This interim financial information has been prepared in accordance with
International Accounting Standard (IAS) 34 Interim Financial Reporting as
adopted within the United Kingdom and should be read in conjunction with the
Group's last annual consolidated financial statements as at 28 September 2024.
They do not include all of the information required for a complete set of
financial statements prepared in accordance with International Financial
Reporting Standards (IFRS). However, selected explanatory notes are included
to explain events and transactions that are significant to an understanding of
the changes in the Group's financial position and performance since the last
annual financial statements.
These interim financial statements were authorised for issue by the Company's
board of Directors on 21 May 2025
The information for the 52 weeks ended 28 September 2024 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A
copy of the statutory accounts for that period has been delivered to the
Registrar of Companies and has been prepared in accordance with IFRS as
adopted within the United Kingdom. The auditor's report on those accounts
was not qualified and did not contain statements under section 498(2) or (3)
of the Companies Act 2006.
This interim financial information has not been audited or reviewed by the
auditor under the International Standard on Review Engagements (UK) 2410.
Going concern
The Directors have adopted the going concern basis in preparing these
financial statements after assessing the impact of identified principal risks
and their possible adverse impact on financial performance, specifically
revenue and cashflows throughout the going concern period, being 12 months
from the date of signing of these financial statements.
The Group has two main sources of funding. Namely, a secured debt financing
structure and a £200m unsecured revolving credit facility due to expire in
July 2026.
Within the secured debt financing structure there are two main covenants: the
level of net worth (being the net asset value of the securitisation group) and
FCF to DSCR. As at 12 April 2025 there was substantial headroom on the net
worth covenant. FCF to DSCR represents the multiple of Free Cash Flow (being
EBITDA less tax and required capital maintenance expenditure) generated by
sites within the structure to the cost of debt service (being the repayment of
principal, net interest charges and associated fees). This is tested quarterly
on both a trailing two quarter and a four quarter basis with a minimum level
of 1.1 times.
The unsecured facility includes financial covenants relating to the ratio of
EBITDAR to rent plus interest (at a minimum of 1.25 times) and Net debt to
EBITDA (to be no more than 3.0 times) based on the performance of the
unsecured estate, tested at each Half Year and Full Year date. Unsecured
facilities expire in July 2026, beyond the going concern assessment period.
In the year ahead the main uncertainties are considered to be the continuation
of growth in sales and the rate of cost inflation. The Directors believe that
there are signs of further increases in the rate of overall cost inflation
facing the Group both in the current financial year and next. These are
expected to manifest particularly in the areas of labour costs (driven by
higher statutory minimum wage rates and by employers national insurance
increases from April 2025) and in food input costs, especially meat. The
outlook overall remains uncertain and will depend on a number of factors
including consumer spending power and confidence, global political
developments and supply chain disruptions and government policy.
1. GENERAL INFORMATION (CONTINUED)
Going concern (continued)
The Directors have reviewed the financing arrangements against a forward
trading forecast in which they have considered the Group's current financial
position. This forecast assumes further growth in sales but recognises the
impact of increasing cost pressure, notably in labour and food costs, which
the Group will expect to have some success in mitigating. Under this scenario
the Group is able to stay within all committed facility financial covenants,
with good levels of headroom, and maintains sufficient liquidity throughout.
The Directors have also considered a severe but plausible downside scenario
covering adverse movements against the base forward forecast in both sales and
cost inflation in which some, but limited, further mitigation activity is
taken. In this downside scenario the Group also retains sufficient liquidity
throughout the period, and no covenants are breached with reasonable headroom
maintained throughout the review period.
After due consideration of these factors, the Directors believe that they have
a reasonable expectation that the Group has sufficient resources to continue
in operational existence for the 12 months from the date of approval of these
condensed financial statements, and therefore continue to adopt the going
concern assumption in their preparation.
Accounting policies
The interim financial information has been prepared on a consistent basis
using the accounting policies set out in the Annual Report and Accounts 2024.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements requires management
to make judgements, estimates and assumptions in the application of accounting
policies that affect reported amounts of assets, liabilities, income and
expense.
Estimates and judgements are periodically reviewed and are based on historical
experience and other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates. Details of the Group's critical accounting judgements
and estimates are described within the relevant accounting policies set out in
the Annual Report and Accounts 2024. Judgements and estimates for the interim
period remain unchanged.
2. SEGMENTAL ANALYSIS
The Group trades in one business segment (that of operating pubs, bars and
restaurants). The Group's brands meet the aggregation criteria set out in
paragraph 12 of IFRS 8 Operating Segments and as such the Group reports the
business as one reportable segment.
3. REVENUE
Revenue is analysed as follows: 2025 2024 2024
28 weeks 28 weeks 52 weeks
£m £m £m
Food 782 751 1,385
Drink 621 597 1,132
Services 51 48 93
Total 1,454 1,396 2,610
Revenue from services includes rent receivable from unlicensed properties and
leased operations of £5m (2024 28 weeks £5m, 2024 52 weeks £9m).
Food and drink revenue includes £14m (2024 28 weeks £12m, 2024 52 weeks
£18m) in respect of gift card redemptions, which was recorded within deferred
income at the prior period end.
4. SEPARATELY DISCLOSED ITEMS
In addition to presenting information on an IFRS basis, the Group also
presents adjusted profit and earnings per share information that excludes
separately disclosed items and the impact of any associated tax. Adjusted
profitability 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 a more effective
comparison of the Group's trading performance from one period to the next.
Adjusted profit and earnings per share information is used by management to
monitor business performance against both shorter-term budgets and forecasts
but also against the Group's longer-term strategic plans.
Judgement is used to determine those items which should be separately
disclosed. This judgement includes assessment of whether an item is of
sufficient size or of a nature that is not consistent with normal trading
activities.
There are no separately disclosed items in the current period. In the prior
period separately disclosed items include movements in the valuation of the
property portfolio as a result of the revaluation exercise of property, plant
and equipment; impairment reviews of right-of-use assets and computer
software.
2025 2024 2024
28 weeks 28 weeks 52 weeks
Notes £m £m £m
Net profit arising on property disposals - - 2
Movement in the valuation of the property portfolio:
- Impairment credit arising from the revaluation of freehold and long a - -
leasehold properties
4
- Impairment of right-of-use assets b - - (17)
- Impairment of computer software c - - (1)
Net movement in the valuation of the property portfolio - - (14)
Total separately disclosed items before tax - - (12)
Tax relating to the above items - - 4
Total separately disclosed items after tax - - (8)
Separately disclosed items are as follows:
a. The impairment arising from the Group's revaluation of its freehold and long
leasehold pub estate comprises an impairment credit as the result of a
revaluation surplus that reverses past impairments net of an impairment
charge, where the carrying values of the properties exceed their recoverable
amount.
b. Impairment of right-of-use assets where their carrying values exceeded their
recoverable amounts, net of reversals of past impairments.
c. Impairment of computer software where the carrying value exceeded the
recoverable amount.
5. FINANCE COSTS AND INCOME
2025 2024 2024
28 weeks 28 weeks 52 weeks
£m £m £m
Finance costs
Interest on securitised debt (40) (44) (79)
Interest on other borrowings (6) (7) (13)
Interest on lease liabilities (9) (9) (17)
Total finance costs (55) (60) (109)
Finance income
Interest receivable on cash balances 5 5 10
Net pensions finance income / (charge) (note 11) 3 (1) (2)
6. TAXATION
The taxation charge for the 28 weeks ended 12 April 2025 has been calculated
by applying an estimate of the annual effective tax rate before separately
disclosed items of 25.7% (2024 28 weeks, 25.4%). The annual effective rate is
slightly above the UK statutory rate of 25% largely due to profits arising and
taxed in Germany, which has a higher statutory tax rate.
The Group is within the scope of the OECD Pillar Two (Global Minimum Tax)
model rules. The legislation has been substantively enacted in the UK and
Germany, being the jurisdictions in which the Group operates. The rules are
effective for the Group from this accounting period commencing 29 September
2024. Initial assessments indicate that Pillar Two income taxes will not be
material to the Group, with the effective tax rate in the UK and Germany both
exceeding the 15% global minimum tax rate by some margin. The Group is
continuing to work on evaluating the final impact of both the calculations and
the reporting requirements through the remainder of FY 2025.
2025 2024 2024
28 weeks 28 weeks 52 weeks
Tax charge in the income statement £m £m £m
Current tax:
- Corporation tax (11) (8) (16)
Total current tax charge (11) (8) (16)
Deferred tax:
- Origination and reversal of temporary differences (23) (19) (33)
- Amounts under-provided in prior periods - - (1)
Total deferred tax charge (23) (19) (34)
Total tax charge in the income statement (34) (27) (50)
Further analysed as tax relating to:
Profit before separately disclosed items (34) (27) (54)
Separately disclosed items - - 4
(34) (27) (50)
6. TAXATION (CONTINUED)
2025 2024 2024
Tax relating to items recognised in other comprehensive 28 weeks 28 weeks 52 weeks
income/(expense) £m £m £m
Deferred tax:
Items that will not be reclassified subsequently to profit or loss:
- Unrealised gains due to revaluations - revaluation reserve - - (74)
- Remeasurement of pension liabilities 4 - (42)
4 - (116)
Items that may be reclassified subsequently to profit or loss:
- Cash flow hedges (4) 4 6
Total tax credit/(charge) recognised in other comprehensive income - 4 (110)
7. EARNINGS PER SHARE
Basic earnings per share (EPS) has been calculated by dividing the profit for
the financial 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 4) in order to allow a better understanding of the
adjusted trading performance of the Group.
The profit used for the earnings per share calculations is as follows:
2025 2024 2024
28 weeks 28 weeks 52 weeks
£m £m £m
Profit for the period 100 81 149
Separately disclosed items net of tax - - 8
Adjusted profit for the period 100 81 157
The number of shares used for the earnings per share calculations are as
follows:
2025 2024 2024
28 weeks 28 weeks 52 weeks
million million million
Basic weighted average number of ordinary shares 595 596 595
Effect of dilutive potential ordinary shares:
- Contingently issuable shares 4 4 5
- Other share options 1 - (- )
Diluted weighted average number of shares 600 600 600
At 12 April 2025, 4,152,712 (2024 28 weeks 4,629,922, 2024 52 weeks 1,486,595)
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. Outstanding options can only be
dilutive, and therefore included in the diluted EPS calculation, when the
average share price during the period exceeds the exercise price of the
options.
7. EARNINGS PER SHARE (CONTINUED)
2025 2024 2024
28 weeks 28 weeks 52 weeks
Pence pence pence
Basic earnings per share
Basic earnings per share 16.8 13.6 25.0
Separately disclosed items net of tax per share - - 1.4
Adjusted basic earnings per share 16.8 13.6 26.4
Diluted earnings per share
Diluted earnings per share 16.7 13.5 24.8
Adjusted diluted earnings per share 16.7 13.5 26.2
8. PROPERTY, PLANT AND EQUIPMENT
2025 2024 2024
12 April 13 April 28 September
Net book value £m £m £m
At beginning of period 4,419 4,086 4,086
Additions 84 80 163
Acquired through business combinations - - 7
Disposals (2) (3) (2)
Net increase from property revaluation - - 258
Depreciation provided during the period (51) (49) (92)
Foreign currency movements 1 - (1)
At end of period 4,451 4,114 4,419
Revaluation and impairment
The freehold and long leasehold licensed properties were valued at market
value as at 28 September 2024, using information provided by CBRE, independent
Chartered Surveyors. This valuation was based on an assessment of individual
asset fair maintainable trade (FMT) and property multiples. The Group has
performed an assessment for material changes that would impact the value of
its freehold and long leasehold properties at the interim date. The Group's
profit performance is in line with forecast supporting the fair maintainable
trade assessed at 28 September 2024 and the property multiples adopted at 28
September 2024 are supported by the current property market. As such there
is no requirement to perform a revaluation at the interim date.
Short leasehold properties, unlicensed properties and fixtures, fittings and
equipment are held at cost less depreciation and impairment provisions. During
the current period, in accordance with IAS 36, the Group has performed an
assessment for indicators of impairment of these categories of property, plant
and equipment, together with right-of-use assets (note 9). This review
included an assessment that current year performance is in line with the
overall Group forecast used in the impairment review at 28 September 2024, and
estimates of long term growth rates and capital maintenance from the year end
remain appropriate. In addition, our sensitivity analysis at FY24 year end
showed that the impairment charge was relatively insensitive to likely
movements in the discount rate (pre-tax WACC) of 11.00%. As such, there are
not considered to be any indicators of impairment that would require the Group
to perform a further review of impairment.
As a result of the above review, no revaluation or impairment has been
recognised in the period (2024 28 weeks £nil, 2024 52 weeks revaluation
increase of £258m and short leasehold properties net impairment of £nil).
8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Goodwill and other intangible assets
Goodwill and other intangible assets at 12 April 2025 of £21m (13 April 2024
£16m, 28 September 2024 £20m) comprise goodwill of £7m (13 April 2024
£2m, 28 September 2024 £7m), brands of £6m (13 April 2024 £5m, 28
September 2024 £7m) and computer software of £8m (13 April 2024 £9m, 28
September 2024 £6m).
As a result of the review of indicators of impairment described above, no
impairment has been recognised against goodwill and other intangible assets in
the period (2024 28 weeks £nil, 2024 52 weeks computer software impairment of
£1m).
Capital commitments
The total amount contracted for but not provided in the financial statements
was £20m (13 April 2024 £25m, 28 September 2024 £18m).
9. LEASES
Right-of-use assets
2025 2024 2024
12 April 13 April 28 September
Net book value £m £m £m
At start of period 307 327 327
Acquired through business combinations - - 7
Additions 14 13 30
Impairment - - (17)
Disposals(a) (2) (5) (5)
Depreciation provided during the period (19) (18) (34)
Foreign currency movements 2 (1) (1)
At end of period 302 316 307
a. Disposals mainly relate to leasehold properties where the freehold
has been purchased, and therefore, the right-of-use assets and corresponding
lease liabilities (see note 10) have been disposed. The freehold purchases
are reflected in property, plant and equipment additions (see note 8).
Impairment review of right-of-use assets
As described in note 8, the Group has reviewed its short leasehold properties
and right-of-use assets for indicators of impairment at the interim date, and
determined that there are no indicators that lead the Group to conclude that a
further review of impairment is required.
Lease liabilities
An analysis of lease liabilities recognised are as follows:
12 April 13 April 28 September
2025 2024 2024
£m £m £m
Current liabilities 42 42 33
Non current liabilities 396 407 414
Total lease liabilities 438 449 447
10. BORROWINGS AND NET DEBT
Borrowings
12 April 13 April 28 September
2025 2024 2024
£m £m £m
Current
Securitised debt 134 127 130
Unsecured revolving credit facilities (1) (2) (1)
Overdraft 21 15 12
Short term financing of employee advances 2 - 2
Total current 156 140 143
Non-current
Securitised debt 976 1,120 1,041
Total borrowings 1,132 1,260 1,184
Net debt
12 April 13 April 28 September
2025 2024 2024
£m £m £m
Cash and cash equivalents 253 194 176
Overdraft (21) (15) (12)
Cash and cash equivalents as presented in the cashflow statement(a) 232 179 164
Securitised debt (1,110) (1,247) (1,171)
Unsecured revolving credit facility 1 2 1
Derivatives hedging balance sheet debt(b) 19 29 19
Short term financing of employee advances(c) (2) - (2)
Net debt excluding leases (860) (1,037) (989)
Lease liabilities (438) (449) (447)
Net debt including leases (1,298) (1,486) (1,436)
a Cash and cash equivalents in the cash flow statement are presented net of an
overdraft within a cash pooling arrangement, relating to various entities
across the group.
b Represents the element of the fair value of currency swaps hedging the balance
sheet value of the Group's US dollar denominated A3N loan notes. This amount
is disclosed separately to remove the impact of exchange rate movements which
are included in the securitised debt amount.
c Advances to employees is a borrowing from Wagestream.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other
short-term highly liquid deposits with an original maturity at acquisition of
three months or less. Cash held on deposit with an original maturity at
acquisition of more than three months is disclosed as other cash deposits. In
the cash flow statement, cash and cash equivalents are shown net of bank
overdrafts that are repayable on demand and form an integral part of the
Group's cash management.
10. BORROWINGS AND NET DEBT (CONTINUED)
Net debt
Net debt comprises cash and cash equivalents, cash deposits net of borrowings
and discounted lease liabilities. Net debt is presented on a constant currency
basis, due to the inclusion of the fixed exchange rate component of the cross
currency swap. Cash flows on the interest rate and cross currency swaps are
shown within interest paid in the Group cash flow statement.
Securitised debt
On 13 November 2003, the Group refinanced its debt by raising £1,900m through
a securitisation of the majority of its UK pubs and restaurants owned by
Mitchells & Butlers Retail Limited. On 15 September 2006 the Group
completed a further debt ('tap') issue to borrow an additional £655m and
refinance £450m of existing debt at lower cost. The notes are secured on
the majority of the Group's property and future income streams therefrom. All
of the floating rate notes are hedged using interest rate swaps which fix the
interest rate payable.
The overall cash interest rate payable on the loan notes is 6.3% (13 April
2024 6.3%, 28 September 2024 6.3%) after taking account of interest rate
hedging and the cost of the financial guarantee provided by Ambac Assurance UK
Limited (Ambac). Ambac acts as a guarantor of the Group's obligations to
repay interest and principal on the loan notes. In the event that the Group
is unable to pay such amounts the guarantee is limited to the Class A1N, A3N,
A4 and Class AB note holders only.
The securitisation is governed by various covenants, warranties and events of
default, many of which apply to Mitchells & Butlers Retail Limited, the
Group's main operating subsidiary. There are two main financial covenants,
being the level of net assets and free cash flow (FCF) to debt service. FCF to
debt service represents the multiple of cash generated by sites within the
structure to the cost of debt service. This is tested quarterly on both a
trailing two quarter and a four quarter basis. There are additional covenants
regarding the maintenance and disposal of
securitised properties and restrictions on its ability to move cash, by way of
dividends for example, to other Group companies.
At 12 April 2025, Mitchells & Butlers Retail Limited had cash and cash
equivalents of £113m (13 April 2024 £90m, 28 September 2024 £91m). Of
this amount £2m (13 April 2024 £1m, 28 September 2024 £2m), representing
disposal proceeds, was held on deposit in an account over which there are a
number of restrictions. The use of this cash requires the approval of the
securitisation trustee and may only be used for certain specified purposes
such as capital enhancement expenditure and business acquisitions.
The carrying value of the securitised debt in the Group balance sheet is
analysed as follows:
12 April 13 April 28 September
2025 2024 2024
£m £m £m
Principal outstanding at beginning of period 1,170 1,308 1,308
Principal repaid during the period (67) (64) (128)
Net principal receipts on cross currency swap 3 3 5
Exchange on translation of dollar loan notes - (5) (15)
Principal outstanding at end of period 1,106 1,242 1,170
Deferred issue costs (1) (2) (1)
Accrued interest 5 7 2
Carrying value at end of period 1,110 1,247 1,171
Liquidity facility
Under the terms of the securitisation, the Group holds a liquidity facility of
£295m provided by two counterparties. The amount drawn at 12 April 2025 is
£nil (13 April 2024 £nil, 28 September 2024 £nil).
Unsecured revolving credit facility
The Group holds an unsecured committed revolving credit facility of £200m,
which expires on 20 July 2026. The amount drawn at 12 April 2025 is £nil, (13
April 2024 is £nil, 28 September 2024 £nil).
10. BORROWINGS AND NET DEBT (CONTINUED)
Movement in net debt excluding leases
2025 2024 2024
28 weeks 28 weeks 52 weeks
£m £m £m
Net increase in cash and cash equivalents 67 76 62
Add back cash flows in respect of other components of net debt:
- Repayment of principal in respect of securitised debt 67 64 128
- Principal receipts on cross currency swap (11) (11) (21)
- Principal payments on cross currency swap 8 8 16
- Short term financing of employee advances - - (2)
Decrease in net debt arising from cash flows 131 137 183
Movement in capitalised debt issue costs net of accrued interest (3) (4) (1)
Decrease in net debt excluding leases 128 133 182
Opening net debt excluding leases (989) (1,170) (1,170)
Foreign exchange movements on cash 1 - (1)
Closing net debt excluding leases (860) (1,037) (989)
Movement in lease liabilities
2025 2024 2024
28 weeks £m 28 weeks 52 weeks
£m £m
Opening lease liabilities (447) (463) (463)
Acquired through business combinations - - (5)
Additions(a) (14) (13) (28)
Interest charged during the period (9) (9) (17)
Repayment of principal 23 18 41
Payment of interest 9 12 17
Disposals(b) 2 5 7
Foreign currency movements (2) 1 1
Closing lease liabilities (438) (449) (447)
a Additions to lease liabilities include new leases and lease extensions or rent
reviews relating to existing leases.
b Disposals mainly relate to leasehold properties where the freehold has been
purchased, and therefore, the right-of-use assets (see note 9) and
corresponding lease liabilities have been disposed.
11. PENSIONS
In the prior period the Trustees of the Mitchells & Butlers Executive
Pension Plan (MABEPP) bought out the liabilities of the plan with Legal &
General Assurance Society Limited through converting the overall bulk annuity
policy into individual policies in members own names. Subsequent to that,
and in the current period the scheme has been wound up with a surplus cash
balance of £3m transferring to the Mitchells & Butlers Pension Plan
(MABPP).
As a result, retirement and death benefits for eligible employees in the
United Kingdom are now provided principally by the Mitchells & Butlers
Pension Plan (MABPP). This plan is a funded, HMRC approved, occupational
pension scheme with defined contribution and defined benefit sections. The
defined benefit section of the plan is now closed to future service accrual.
The defined benefit liabilities relate to this funded plan, together with an
unfunded unapproved pension arrangement (the Executive Top-Up Scheme, or
MABETUS). The assets of the MABPP plan are held in a self-administered trust
fund separate from the Company's assets.
In addition, Mitchells & Butlers plc also provides a workplace pension
plan in line with the Workplace Pensions Reform Regulations. This
automatically enrols all eligible workers into a Qualifying Workplace Pension
Plan.
Measurement of scheme assets and liabilities
MABPP buy-in policy transaction
During the 53 weeks ended 30 September 2023, 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 at the balance sheet date the buy-in continues.
The Trustee and insurer continue to progress a data cleanse project. Net
reserves have been included within the MABPP balance sheet as follows:
- £16m to cover the impact of a trivial commutation exercise,
contingent spouse pension calculations, some data corrections and GMP
rectification. This amount is a best-estimate of an additional premium that
will need to be paid to the insurer when the buy-in is finalised.
- £24m as an additional liability arising from GMP equalisation; the
majority of which will be secured with the insurer when the buy-in is
finalised, via the payment of an additional premium.
These reserves may be updated in future as the data cleanse project 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 to enable future employer contributions for them to be
met out of the surplus in the MABPP. Since this was a change in the
Trustee's agreed use of the MABPP surplus compared to previous years, the
accounting surplus was recognised in full during the 52 weeks ended 28
September 2024, with the full value of the surplus of £164m 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. Prior
to the 52 week period ending 28 September 2024 no actuarial surplus had been
recognised as the Company did not have an unconditional right to recover any
surplus from the pension plans. During the period, the MABPP surplus has
funded £6m of the Company's employer contributions, AVCs in respect of prior
year bonus payments and death in service benefits. This is shown in the
surplus movements below.
11. PENSIONS (CONTINUED)
Actuarial valuation
The actuarial valuations used for IAS 19 (revised) purposes are based on the
results of the latest full actuarial valuation carried out at 31 March 2022
and updated by the schemes' independent qualified actuaries to 12 April 2025.
Schemes' assets are stated at market value at 12 April 2025 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 used at the balance sheet date have been
updated to reflect changes in market conditions in the period. The key
assumptions used at the balance sheet date are Discount Rate of 6.0% (13 April
2024 5.1%, 28 September 2024 5.1%); Pensions Increases (RPI max 5%) of 3.0%
(13 April 2024 3.0%, 24 September 2024 3.0%); and Inflation (RPI) of 3.1% (13
April 2024 3.2%, 28 September 2024 3.2%). The mortality assumptions remain
unchanged from the last financial year end.
Minimum funding requirements
The results of the 2022 actuarial valuation show a marginal surplus and,
subsequent to this, buy-in transactions for both MABPP and MABEPP were
completed in prior periods. As a result, payments for both schemes were made
into Blocked Accounts with amounts paid recognised as other receivables.
In the prior period the full amount within the MABPP Blocked Account of £35m
was repaid to the company. A receivable balance of £12m at 28 September
2024 in respect of the MABEPP blocked account has been repaid to the Company
in the current period.
Amounts recognised in respect of pension schemes
The net pension surplus is presented in the Group balance sheet as follows.
Group balance sheet 2025 2024 2024
12 April 13 April 28 September
£m £m £m
Pension surplus (MABPP)(a) 141 - 164
Current pension liability (MABETUS) (1) (1) (1)
Non-current pension liability (MABETUS) (21) (22) (24)
Net actuarial surplus/(liability) 119 (23) 139
Associated deferred tax (liability)/asset (30) 6 (35)
a. The MABPP pension surplus comprises the following assets and
liabilities.
MABPP pension surplus 2025 2024 2024
12 April 13 April 28 September
£m £m £m
Fair value of scheme's assets 1,115 1,516 1,238
Present value of scheme's liabilities (974) (1,366) (1,074)
Actuarial surplus in the scheme 141 150 164
Additional liabilities recognised due to asset ceiling - (150) -
Net MABPP pension surplus 141 - 164
11. PENSIONS (CONTINUED)
Movements in the net pension surplus/(liability) are analysed as follows:
2025 2024 2024
12 April 13 April 28 September
£m £m £m
Pension surplus/(liabilities) at beginning of period 139 (22) (22)
Administration costs (2) (2) (5)
Net pensions finance income/(charge) 3 (1) (1)
Employer contributions to MABETUS 1 1 1
Utilisation of pension surplus(a) (6) - -
Remeasurement of pension liabilities (16) 1 166
Net pension surplus/(liabilities) at end of period 119 (23) 139
a. Includes £3m for DC contributions and £3m for AVCs in respect
of prior year bonus payments.
12. FINANCIAL INSTRUMENTS
Fair value of derivative financial instruments
The table below sets out the valuation basis of financial instruments held at
fair value by the Group:
12 April 13 April 28 September 2024
2025 2024
£m £m £m
Financial assets:
Currency swaps* 20 30 19
Financial liabilities:
Interest rate swaps* (17) (21) (29)
3 9 (10)
* Level 2 instruments using inputs, other than quoted prices, that are
observable either directly or indirectly
The fair value of interest rate and currency swaps is the estimated amount
which the Group could expect to pay or receive on termination of the
agreements. These amounts are based on quotations from counterparties which
approximate to their fair market value and take into consideration interest
and exchange rates prevailing at the balance sheet date.
Fair value of financial assets and liabilities
Borrowings have been valued as level 1 financial instruments as the various
tranches of the securitised debt have been valued using period end quoted
offer prices. As the securitised debt is traded on an active market, the
market value represents the fair value of this debt. The current value of
the overdraft represents its fair value. The carrying value and fair value of
borrowings is as follows:
12 April 13 April 28 September
2025 2024 2024
Carrying value Fair value £m Carrying value Fair value £m Carrying value Fair value £m
£m £m £m
Borrowings (note 10) (1,132) (1,069) (1,260) (1,114) (1,184) (1,084)
All other financial assets and liabilities are either short-term in nature or
their book values approximate to fair values.
13. RELATED PARTY TRANSACTIONS
The Group holds a property lease agreement with its associate company, Fatboy
Pub Company Limited. The Group has entered into the following transactions
with the associate:
2025 2024 2024
28 weeks 28 weeks 52 weeks
£000 £000 £000
Rent charged 61 50 128
Sales of goods and services 11 9 12
72 59 140
The balance due from Fatboy Pub Company at 12 April 2025 was £nil (13 April
2024 £5,000, 28 September 2024 £14,000), net of a provision of £179,000 (13
April 2024 £179,000, 28 September 2024 £179,000).
During the prior period, Mitchells & Butlers Retail Limited entered an
option arrangement with Tottenham Hotspur Football Co Limited (THFC), a
related party, to sell the company's leasehold interest in a trading site.
THFC paid an agreed amount to the company under the option agreement. Should
the option under the option agreement be exercised, THFC would pay a further
amount to acquire the site at the fair market value at the time the option
agreement was entered into.
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 condensed income statement with details of separately disclosed items
provided in note 4.
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.
APMs used to explain and monitor Group performance include:
APM Definition Source
EBITDA Earnings before interest, tax, depreciation and amortisation. Group condensed income statement
Adjusted EBITDA Annualised EBITDA on a 52-week basis before separately disclosed items is used Group condensed income statement
to calculate net debt to EBITDA.
Operating profit Earnings before interest and tax. Group condensed income statement
Adjusted operating profit Operating profit before separately disclosed items. Group condensed income statement
Like-for-like sales growth Like-for-like sales growth reflects the sales performance against the Group condensed income statement
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 earnings per share (EPS) Earnings per share using profit before separately disclosed items. Note 7
Net debt Net debt comprises cash and cash equivalents, cash deposits net of borrowings Note 10
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.
Net debt : Adjusted EBITDA The multiple of net debt including lease liabilities, as per the balance sheet Note 10
compared against 52-week EBITDA before separately disclosed items, which is a
widely used leverage measure in the industry.
Group condensed income statement
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.
2025 2024 Year-on-year
28 weeks 28 weeks
Source £m £m %
Reported revenue Condensed income statement 1,453.9 1,395.6 4.2%
Less non like-for-like sales and income (116.7) (113.1)
Like-for-like sales 1,337.2 1,282.5 4.3%
Drink sales
2025 2024 Year-on-year
28 weeks 28 weeks
Source £m £m %
Reported drink revenue Note 3 620.5 596.9 4.0%
Less non like-for-like drink sales (44.0) (44.0)
Drink like-for-like sales 576.5 552.9 4.3%
Food sales
2025 2024 Year-on-year
28 weeks 28 weeks
Source £m £m %
Reported food revenue Note 3 782.4 750.9 4.2%
Less non like-for-like food sales (64.6) (59.7)
Food like-for-like sales 717.8 691.2 3.8%
Other sales
2025 2024 Year-on-year
28 weeks 28 weeks
Source £m £m %
Reported other revenue Note 3 50.94 47.80 6.6%
Less non like-for-like other sales (8.02) (9.34)
Other like-for-like sales 42.92 38.46 11.6%
B. Adjusted operating profit
Operating profit before separately disclosed items as set out in the Group
Condensed 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.
2025 2024 Year-on
28 weeks 28 weeks -year
Source £m £m %
Operating profit Condensed income statement 181 164 10.4%
Separately disclosed items Note 4 - -
Adjusted operating profit 181 164 10.4%
Reported revenue Condensed income statement 1,454 1,396 4.2%
Adjusted operating margin 12.4% 11.7% 0.7bps
C. Adjusted earnings 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.
2025 2024 Year-on
28 weeks 28 weeks -year
Source £m £m %
Profit for the period Condensed income statement 100 81 23.5%
Add back separately disclosed items Note 4 - -
Adjusted profit 100 81 23.5%
Basic weighted average number of shares Note 7 595 596
Adjusted earnings per share 16.8p 13.6p 23.5%
D. Net Debt: 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 IFRS16. Adjusted EBITDA is used for this measure to
prevent distortions in performance resulting from separately disclosed items.
2025 2024
28 weeks 28 weeks
Source £m £m
Net debt Note 10 1,298 1,486
Adjusted EBITDA H1 Group condensed income statement 252 233
Adjusted EBITDA prior year H2* 209 183
Adjusted 52-week EBITDA 461 416
2.8 3.6
Net debt : Adjusted EBITDA
*H2 measures are calculated from the income statement as the measure for the
52 weeks ended 30 September 2023, adjusted to remove the 53(rd) week, less the
measure for the 28 weeks ended 8 April 2023
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