Mitchells & Butlers - Full Year Results


Adjusted operating profita growth in the second half


Like-for-like salesa growth maintained


Momentum gathering from second wave of initiatives

"Focus on our three priority areas of building a more balanced business; instilling a more commercial culture; and driving an innovation agenda has continued to move the business forward over the financial year.  The implementation of the second wave of initiatives from our transformation programme has resulted in sustained like-for-like sales growth, continued market out-performanceb and a return to profit growth in the second half despite Easter moving into the first half.

We continue to work hard on driving efficiency gains and profitable sales growth through the ongoing roll out of initiatives to mitigate the cost headwinds impacting the industry.

Overall, the Company is positioned well to continue creating shareholder value in the long term."


Phil Urban, Chief Executive

Financial performance


Full year like-for-like salesa up 1.3% and up 2.2%a in recent 7 weeks 


Adjusted operating profita of £303ma, down 1.6% on a 52 week basis


Adjusted operating profita growth in second half of £3m


Adjusted earnings per sharea of 34.1pa, down 0.9% on a 52 week basis


Strategic progress


Sustained like-for-like salesgrowth remains ahead of the market


£28m of savings achieved to mitigate continuing inflationary cost headwinds


Completed 232 return generating projects with focus on premiumisation or amenity enhancement


Improved guest care and responsiveness; 93% of online reviews responded to, up 10ppts


Improved employee engagement; pub management turnover reduced 2.6ppts


Reported results


Total revenue of £2,152m (FY 2017 £2,180m)


Operating profit of £255m (FY 2017 £208m)


Profit before tax of £130m (FY 2017 £77m)


Basic earnings per share 24.5p (FY 2017 15.1p)


Balance sheet and cash flow


Capital expenditure of £171m (FY 2017 £169m), including 7 openings of new sites and 232 conversions and remodels (FY 2017 13 new sites and 252 conversions and remodels)


Adjusted free cash flowa of £(19)ma (FY 2017 £14m)


Net debt of £1.69bn (FY 2017 £1.75bn) representing 4.0 times adjusted EBITDAa (FY 2017 4.2 times)


Prioritising estate investment and de-leverage against a challenging back drop as previously outlined, no final dividend declared



During the year we have maintained a strong trading performance, investing in our estate and mitigating £28m of cost inflation whilst maintaining quality for our guests. 

For a second consecutive year like-for-like salesa growth outperformed the market.  We achieved like-for-like salesa growth of 1.3% in the financial year despite extended periods of snow, unusually hot weather in the summer and England's prolonged success in the FIFA World Cup.  The last reported period of like-for-like salesagrowth of 2.2% was free from one-off events and, since the year-end, like-for-like salesa have continued to grow at 2.2%.  Total sales grew by 0.5% on a 52 week basis impacted by disposals made in the prior year.

Profitability in the first half was negatively impacted by snow in particular, resulting in a decline of £8m against last year. However, in the second half, adjusted operating profita grew by £3m, despite Easter shifting into the first half, as the momentum from our strategic initiatives continued to gather pace. 

Adjusted operating profita of £303m was down 1.6% year-on-year on a 52 week basis.  On a statutory basis profit before tax of £130m grew against last year impacted by separately disclosed items. 


The eating out industry has faced a number of challenges over recent years.  The number of restaurants in the UK increased by 11% over the past five years, outstripping demand growth and resulting in pressure on sales per site across the sector.  Over the same period, the sector has continued to face strong cost headwinds with the combined result of these two factors being a number of CVAs and business closures amongst our competitors in the past year.  In the twelve months to September 2018, the number of restaurants in operation in the UK fell by 1.0% reflecting the competitive pressure in this highly fragmented sector.

From a demand perspective there have been several economic factors impacting consumer confidence including Brexit, political uncertainty and limited growth in real wages.  Despite this, turnover in the eating out market as a whole continues to grow, with forecast growth of 1.5% in 2018 indicating that leisure spend is currently being protected to some extent by consumers.  Market trends suggest that consumers are eating out less frequently but spending more when they do, supporting our strategy of premiumisation and focus on providing opportunities for guests to 'trade up' menus.

The impact of Brexit remains uncertain.  Aside from macro-economic consequences, the specific areas of material impact for our business are increases in costs and reduction of availability of goods, and implications of restrictions on the free movement of labour.  On exit of the EU, cost of goods would be impacted by changes in terms of trade and therefore tariffs, additional border controls and fluctuations in the value of sterling.  From an employment perspective, at a time when unemployment levels are at a 40-year low, any restriction on the free movement of labour would have a material impact on both the cost of labour and access to talent.  Currently across our business, 13% of staff are non-British EU nationals, with the proportion fluctuating by geographic region.  We remain close to these issues whilst we await further details.


In the first seven weeks of the new financial year like-for-like salesa have grown by 2.2%.

A return to adjusted operating profita growth in the second half of the last financial year was a significant milestone for the Company. With like-for-like salesa growth consistently ahead of the market and our focus on efficiency initiatives, we are confident that we are addressing the elements of performance which are within our control.  However, the market in which we operate remains challenging and a high level of macro uncertainties remain.  We will remain focused on maintaining a strong balance sheet and reducing our net debt whilst positioning the business to generate long term shareholder value.


On a statutory basis, profit before tax for the year was £130m (FY 2017 £77m), on sales of £2,152m (FY 2017£2,180m). 

The Group Income Statement discloses adjusted profit and earnings per share information that exclude separately disclosed items to allow a better understanding of the trading of the Group.  Separately disclosed items are those which are separately identified by virtue of their size or incidence.

FY 2017 was a 53 week period. In order to facilitate comparison of trading performance a restated 52 week summary of adjusted performance is detailed below.  All year-on-year growth rates in the financial review are provided on a consistent 52 week basis.









Adjusted a


FY 2018

FY 2017

FY 2018

FY 2017



53 weeks £m


52 weeks £ma






Operating profit





Profit before tax





Earnings per share





Operating profit margin





At the end of the period, the total estate comprised 1,750 sites in the UK and Germany of which 1,687 are directly managed.