Annual Report
and Accounts 2024
Mitchells and Butlers Annual Report
and Accounts 2024
About us
Financial highlights
Revenue
£2,610m
FY 2023: £2,503m
Statutory operating profit
£300m
FY 2023: £98m
Adjusted operating profitb
£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.
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
For over 125 years the Group has been at
the forefront of UK drinking and eating out,
running many of the UK’s most beautiful and
iconic pubs and restaurants. We employ over
50,000a people in pubs, bars and restaurants
that are located across the length and breadth
of the UK and in Germany.
We are a leading operator of managed
restaurants and pubs with 1,654 largely-freehold
managed businesses representing some of the
most popular brands and formats in the UK.
Our scale is impressive. In FY 2024 we served over
100 million meals, and around 330 million drinks.
Our strategy remains focused on our three
priority areas of building a more balanced
business, instilling a commercial culture, and
driving an innovation agenda, whilst pursuing
our purpose of being 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
01
Introduction
Contents
About us/Financial highlights/Environmental targets
At a glance
Welcome to Mitchells and Butlers
Our purpose
Chair's statement
Chief Executive's business review
Our markets
Our business model
Value Creation Story
Our strategic priorities
Key performance indicators
Our sustainability targets
Task Force on Climate-related Financial Disclosures
Risks and uncertainties
Compliance statements - Corporate viability
disclosure - Non-financial and sustainability
information statement - Section
172 Companies Act statement
Financial review
Governance at a glance
Chair's introduction to governance
Board of Directors
Directors' report
Statement of Directors' responsibilities
in respect of the Annual
Report and Accounts
Corporate governance statement
Audit Committee report
Report on Directors' remuneration
Independent auditor's report to the members
of Mitchells and Butlers plc
Group income statement
Group statement of comprehensive income
Group balance sheet
Group statement of changes in equity
Group cashflow statement
Notes to the consolidated financial statements
Mitchells and Butlers plc Company financial statements
Notes to the Mitchells and Butlers plc Company
financial statements
Alternative performance measures
Shareholder information
Introduction
For over 125 years the Group has been at the forefront
of UK drinking and eating out, running many of
the UK's most beautiful and iconic pubs and restaurants.
We employ over 50,000 people in pubs, bars
and restaurants that are located across the length
and breadth of the UK and in Germany. (As at 28
September 2024.)
We are a leading operator of managed restaurants and pubs
with 1,654 largely-freehold managed businesses representing
some of the most popular brands and formats
in the UK.
Our scale is impressive. In Financial Year 2024 we served over 100
million meals, and around 330 million drinks.
Our strategy remains focused on our three priority areas of building a more balanced business, instilling
a commercial culture, and driving an innovation agenda, whilst pursuing our purpose of being the
host of lifes memorable moments, bringing people and communities together through great experiences.
Financial highlights
Revenue: 2,610 Million Pounds.
Financial Year 2023:
2,503 Million Pounds.
Statutory operating profit: 300
Million Pounds. Financial
Year 2023: 98 Million
Pounds.
Adjusted operating profit: 312 Million Pounds.
Financial Year 2023: 226 Million Pounds.
(The Directors use a number of alternative
performance measures ('APMs')
that are considered critical to aid understanding
of the Groups performance.
Key measures are explained on
pages 186 to 189 of this report.)
Environmental targets
Net Zero Greenhouse gas emissions
by Financial Year 2040
(Scope 1, 2 and 3) (As defined
on page 45.). Zero Operational
waste to landfill by
Financial Year 2030. 50% Reduction
in food waste by Financial
Year 2030
Note: Financial Year 2023
was a 53-week period.
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.
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.
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.
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.
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.
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.
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.
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.
Mitchells & Butlers
at a glance
Strategic Report
Governance
Financial Statements
Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024
03
02
Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
Introduction
Alex City: 43 sites. Alex city centre bars and brasseries
offer all day menus and drinking across
Germany.
Miller and Carter: 129 sites. Miller and Carter are
steakhouse restaurants offering premium-grade
beef. They are designed to be the
steak lovers destination for everyday and special
dining-out occasions.
Premium Country Pubs: 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.
Ego restaurants: 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.
Stonehouse pubs: 89 sites. Stonehouse pubs offer
freshly-carved, slow-cooked roasts, and stone-baked
pizzas along with other pub classics.
All Bar One: 46 sites. All Bar One bars are modern
and cosmopolitan serving food and drink in
bright contemporary environments positioned in
city-centre locations.
Ember Inns: 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.
Nicholson's: 81 sites. Nicholsons 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.
Sizzling: 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.
Harvester: 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.
Toby Carvery: 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.
Browns: 27 sites. Browns restaurants are mainly
located in city centres around the UK and
offer casual, elegant, brasserie dining often
in landmark architectural buildings.
High Street: 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.
O'Neills: 40 sites. ONeills are Irish bars located
in city and town centres as well as on suburban
high streets. O'Neills offers live sports
and, in larger sites, entertainment through
music rooms.
Castle pubs: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.
Pesto: 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.
Vintage Inns: 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.
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
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.
The Clachan, Kingly Street, London.
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
The Belvedere Arms, Sunninghill
Miller & Carter steakhouse, Stevenage
Mitchells & Butlers at a glance continued
Strategic Report
Governance
Financial Statements
Other Information
Mitchells & Butlers plc Annual Report and Accounts 2024
05
04
Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
Introduction
Our business has unique strengths that enable us to
create value for our stakeholders.
business with a long-term strategy to
transfer debt to equity as debt is paid
down.
62 Million Pounds of cashflow generated in Financial
Year 2024
65% home-grown and over
75% in existence for over
20 years
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 people
Our people are fundamental to the delivery of great
experiences for our guests
50,000 plus Employees making us one of the largest
employers in the industry
Retail staff turnover reduced by 17 percentage
points to 64% due to the
effective delivery of our People Promise
1,600 plus Apprentices currently
in learning
1,654 managed businesses with favourable
spread of locations, price points
and occasions. This leaves the business
well-hedged against changes in
consumer taste
UK sales by region (Financial Year 2024)
Wales 4%
South West 7%
Scotland 5%
North East 3%
North West 10%
Yorkshire and Humberside 8%
East Midlands 5%
West Midlands 15%
East of England
8%
London 21%
South East (excluding London)
14%
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
Introduction
06
Annual Report and Accounts 2024 Mitchells & Butlers plc
Welcome to Mitchells and
Butlers
Our purpose is to be the host of life's memorable
moments, bringing people and communities
together through great experiences.
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.
Our purpose is to be the host of lifes 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
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
5.3%
Like-for-like salesa 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
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08
Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
Introduction
Our purpose
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
5.3% Like-for-like sales growth (The
Directors use a number of alternative
performance measures (APMs)
that are considered critical
to aid understanding of the Groups
performance. Key measures
are explained on pages 186
to 189 of this report. )
195 Investment projects
in Financial Year
2024
154 Million Pounds Invested in
our estate in Financial Year
2024
Our General Managers have responded
directly to feedback from guests
during the year taking responsibility,
driving improvements and
building relationships
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.
£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
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Governance
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Mitchells & Butlers plc Annual Report and Accounts 2024
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10
Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
Introduction
Lifes memorable moments
Over 33 Million Pounds of
sales over the three main
trading days of Christmas
this year
Over 960 Thousand pounds of
main meals sold over the Mothers
Day weekend this
year
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.
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.
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.
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…
£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
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Mitchells & Butlers plc Annual Report and Accounts 2024
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12
Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
Introduction
Bringing people and communities together
16 tonnes of unavoidable surplus food,
equivalent to 38,000 main meals,
donated to 732 charities via
FareShare in the year
Over 200 Thousand raised
for Social Bite from
the Festival of Kindness
98% of operational waste
diverted from landfill
in Financial Year
2024
726 thousand meals redistributed
through Too
Good To Go
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 Financial Year 2024, can be seen overleaf.
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.
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.
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.
Bringing people and communities together continued
Social Bite
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Mitchells & Butlers plc Annual Report and Accounts 2024
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14
Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
Introduction
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.
1. Food and drink provision. Our fundraising efforts support the
provision of food and drink to people impacted by homelessness
through Social Bites network of partner charities
throughout the UK.
2. Jobs first programme. We have employed 26 people to date
from Social Bites 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 and 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.
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 ﾣ113,000 for the movement to
end homelessness.
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 ﾣ1,400. Another
team cycled all the way from Birmingham to London, visiting
every Nicholsons pub along the way.
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.
High
Team engagement
at record highs
through
great
experiences
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
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16
Annual Report and Accounts 2024 Mitchells & Butlers plc
Introduction
Introduction
Great experiences
4.5 Average guest
review scores
out of 5 in
the year
61% of General Managers
promoted
through internal
succession
Over 1,600 apprentices
currently in
learning
-17% points Retail staff
turnover reduced
this year
High Team engageme
at record
highs
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.
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.
“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.”
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.
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
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18
Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
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 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."
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.
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.
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.
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.
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.
Bob Ivell, Chair, Mitchells
and Butlers plc
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 2024b. 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 easec 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
salesa 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 profita
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 salesa 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 salesa growth over the latter half
of the quarter to 8.2%, resulting in overall
like-for-like salesa 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
salesa 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.
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 salesa 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
20
Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
"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
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 (CGA Hospitality Market
Monitor, August 2024.). 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 (Asda Income Tracker ) 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.
Against this backdrop total sales across the period were 2,610
million pounds reflecting 6.1% growth on Financial Year
2023, on a 52-week basis. Like for like sales (The Directors
use a number of alternative performance measures (APMs)
that are considered critical to aid the understanding of
the Groups performance. Key measures are explained on
pages 186 to 189 of this report. ) 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 300 million
pounds reflects a notable recovery from last year (Financial
Year 2023 98 million pounds) built on this strong sales
performance coupled with falling cost inflation. Adjusted
operating profit(The Directors use a number of alternative
performance measures (APMs) that are considered
critical to aid the understanding of the Groups performance.
Key measures are explained on pages 186 to 189
of this report. ) of 312 million pounds represents a 91 million
pounds 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 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 growth over the latter half of the quarter to 8.2%,
resulting in overall like-for-like sales growth for the quarter
of 7.7%. (The Directors use a number of alternative performance
measures (APMs) that are considered critical to aid
the understanding of the Groups performance. Key measures
are explained on pages 186 to 189 of this report. )
Sales remained strong through the second quarter particularly on
key trading dates. Across the quarter, we recorded like-for-like
sales 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. (The Directors use a number of alternative performance
measures (APMs) that are considered critical to aid
the understanding of the Groups performance. Key measures
are explained on pages 186 to 189 of this report. )
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.
Our strategic priorities
Our strategic pillars, which provide the
foundation for our performance, remain
consistent:
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 Financial Year 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.
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 Financial Year 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 510
sites in Financial Year 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 15 million pounds.
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 salesa 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
Other Information
Financial Statements
Governance
Introduction
Strategic Report
Mitchells & Butlers plc Annual Report and Accounts 2024
23
Strategic Report
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% (Financial Year 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 (Financial Year 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:
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 and 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 Financial Year 2024, with consistent
market outperformance. As we move into Financial Year
2025 we expect more normalised levels of sales growth as the
inflationary environment eases. The current underlying run rate
of like-for-like sales growth, as measured across the first seven
weeks of the new financial year, is 4.0%. (The Directors use
a number of alternative performance measures (APMs) that are
considered critical to aid the understanding of the Groups performance.
Key measures are explained on pages 186 to 189 of
this report. )
Cost headwinds are now anticipated to total c. 100 Million Pounds
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 Financial Year 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 and
Butlers plc
Net Zero emissions by 2040, including Scope 1, 2 and
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 and 2
emissions reduced from the baseline by 18% (Financial
Year 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 Financial Year 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.
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.
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.
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
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 2024a.
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 Trackerc) 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.
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 Intelligencec
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
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24
Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
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 (CGA Hospitality Monitor, August 2024. ).
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% (Lumina
Intelligence UK Menu and Food Trends Report December
2023. With positive indications of increasing disposable
income in recent months as inflationary pressures on
households ease (Asda Income Tracker, September 2024.)
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.
b. Premiumisation and Experience The second key trend we see
is around
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.
c. Technology and 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.
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.
e. Sustainability and 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 markets 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 (Asda Income
Tracker, September 2024.) 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.
UK Consumer Confidence Index
October 2023, -30. November 2023, -24. Decem
2023, -22. January 2024, -19. February
2024, -21. March 2024, -21. April 2024,
-19. May 2024, -17. June 2024, -14. July
2024, -13. August 2024, -13. September
2024, -20. October 2024, -21.
Asda Income Tracker (year on year percentage change)20 15 13% 12% 10 5 0% -5 -10 -15 -20 Jan Apr Jul Oct Jan Apr Jul Oc
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
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
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
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
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Our business model - The Mitchells and
Butlers difference
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
2
1
3
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.
Everything we do is…
Run by our people…
+50,000*
Employees
* As at 28 September 2024.
Suppliers
Guests
Employees
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
• Property
Understanding
what our guests
want influences
every element
of our brands
and offers.
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.
The combination of our brands, people, supply chain, estate
and central functions creates memorable moments for our guests.
Governance
Financial Statements
Other Information
Introduction
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Our business model
How we create value
1. Our experience and ability
to interpret guest feedback
help us understand
what our guests
want.
2. Understanding what
our guests want
influences every
element of our brands
and offers.
3. Everything we do is the combination of our
brands, people, supply chain, estate and
central functions creates memorable moments
for our guests.
Run by our people: Over 50,000
Employees (As at
28 September 2024.)
Supplied by our supply
chain: Over 1,800
Suppliers
Realised within our estate:
1,726 Pubs, bars
and restaurants
Supported and managed by our
central functions:
4. Everything we learn about our guests'
requirements is fed back.
5. Creating memorable moments
generates value for
stakeholders.
Suppliers, Guests, Employees,
Local community,
Environment, Investors.
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.
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
Suppliers
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
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Strategic Report
Value creation story: Financial Year 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
Guests
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
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
Role
Regular development catch ups are held throughout
the year to support employees' progression
and personal development.
Dave Coplin, an independent Non-Executive Director,
is the nominated Board member responsible
for representing the employee voice
at Board level.
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.
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
Local community
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
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Strategic Report
Developed a nutritional roadmap focused on
enhanced information and balanced choices
159 million pounds tax paid
in Financial Year 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 Financial Year 2024 in energy-reducing
technology
98% of operational waste
diverted from landfill
in Financial Year 2024
Target to reduce our absolute Scope 1 and 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 Financial Year
2024 vs 2019 baseline
Committed to achieving Net Zero emissions
by 2040
Robust financial management through challenging
macro-economic conditions
Equity raise in Financial Year 2021 gave
strength to balance sheet
Reporting on environmental, social and
governance issues enhanced
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 salesa 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.
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
“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.
Governance
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
35
34
Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
Our strategic priorities
Maintaining our consistent three strategic priorities
"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."
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 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. (The Directors use a number of alternative
performance measures (APMs) that are considered
critical to aid the understanding of the Groups performance.
Key measures are explained on pages 186 to 189
of this report.)
The table on page 35 outlines these strategic priorities, our progress
against them in Financial Year 2024, our priorities
for Financial Year 2025 and their link to our sustainability
strategy, risks and KPIs.
1. Build a more balanced
business
Financial Year 2024 progress
Financial Year 2025 priorities
Capital expenditure at 154 Million Pounds
Links to Key Risks: 1, 2, 3,
7, 8, 10, 11, 12, 14. See
pages 46 to 52
Links to KPIs: 2, 3, 4, 5.
See pages 36 and 37
2. Instil a more commercial
culture
There is a full capital programme planned for Financial Year 2025
Financial Year 2024 progress
Conversion to Ego, acquired in Financial Year 2023, continues with
31 sites within the brand and strong sales uplifts following conversion
Financial Year 2025 priorities
Sustainability
Links to Key Risks: 1, 2, 3, 6,
7, 8, 10, 11, 12, 14. See pages
46 to 52
Links to KPIs: 1, 2, 3, 5.
See pages 36 and 37
3. Drive an innovation agenda
Financial Year 2024 progress
Financial Year 2025 priorities
Sustainability
Links to Key Risks: 1, 2, 4,
5, 7, 10, 11, 12, 14. See
pages 46 to 52
Links to KPIs: 2, 3, 5. See
pages 36 and 37
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
19%
6%
-0.8%
18%
19%
2020
2021
2022
2023
2024
£312m
£99m
£29m
£240m
£221mb
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 salesa
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
4.
Incremental return on
expansionary capitala
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 profita
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 profita 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
Key performance indicators
Measuring performance
We measure our performance against our strategy
through five key performance indicators.
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.
Staff turnover
64%
Guest review score
4.5
Year-on-year same outlet
like-for-like salesa
5.3%
Incremental return on
expansionary capitala
19%
Adjusted
operating profita £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
36
Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
Key performance indicators
Measuring Performance
The Directors use a number of alternative performance measures (APMs) that are considered critical to
aid the understanding of the Groups performance. Key measures are explained on pages 186 to 189
of this report.
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.
Financial Year 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 Financial Year 2020
and 2021, turnover was suppressed by the impact of Covid-19
as there were minimal leavers during closure periods.
2020, 56%. 2021, 58%.
2022, 94%. 2023,
81%. 2024, 64%.
Definition
Financial Year 2024 performance
Our average feedback score across all major feedback channels
was 4.5 out of 5 for Financial Year 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.
Guest review score
2020, 4.2. 2021, 4.3. 2022,
4.3. 2023, 4.4. 2024,
4.5.
3. Year-on-year same outlet like-for-like
sales
Definition
Covid-19 related closures, therefore during these years
sales were compared to the sales in Financial
Year 2019, being the last full year pre-Covid-19.
Since Financial Year 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.
Financial Year 2024 performance
Like-for-like sales increased by 5.3% in Financial Year
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.
Year-on-year same outlet like-for-like
sales
2020, -3.5%. 2021, -9.6%.
2022, 1.1%. 2023,
9.1%. 2024, 5.3%.
4. Incremental return on expansionary
capital
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.
Financial Year 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.
Incremental return on expansionary
capital
2020, 6%. 2021, -0.8%.
2022, 18%. 2023,
19%. 2024, 19%.
5. 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 disclosed
by virtue of their size or incidence. Excluding
these items provides both management and
investors with useful additional information about
the Groups performance and supports an effective
comparison of the Groups 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.
Financial Year 2024 performance
Adjusted operating profit of 312 million pounds was 91 million pounds
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.
Adjusted operating profit
2020, 99 million pounds. 2021, 29 million pounds. 2022,
240 million pounds. 2024, 221 million pounds
(52 week basis). 2024, 312 million pounds.
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
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
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Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
Our sustainability targets
The focus areas of our strategy were determined by a materiality assessment
informed by stakeholder engagement
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 Degrees C, and our roadmap
was validated by the SBTi in January 2024.
Objective: We are committed to reducing our emissions, tackling
waste and protecting biodiversity
Key actions:
UN Sustainable Goal alignment: 12, 14, 15.
Objective: We strive to deliver responsibly-sourced
products and menu options for
everyone
Key actions:
UN Sustainable Goal alignment: 1, 2, 5, 8.
Objective: People are central to our business; we
are focused on supporting our teams and the
communities we serve
Key Actions:
UN Sustainable Goal alignment: 11, 13.
1. Net Zero greenhouse gas emissions
by 2040
Target:: Achieve Net Zero greenhouse gas emissions by 2040 (absolute
reduction of emissions, including Scope 1, 2 and 3) from
our Financial Year 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 and 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 degrees 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 and 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 Financial Year 2024 we will recalculate our
baseline and reduction pathway to align with the Forest, Land
and Agriculture (FLAG) guidance.
Performance: Our Scope 1, 2 and 3 greenhouse gas emissions
have decreased by 14% against our Financial Year
2019 baseline in Financial Year 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% (Financial
Year 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 Financial Year 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.
Target to achieve Net Zero greenhouse gas
emissions by 2040.
2. Zero operational waste to landfill
Target: Zero operational waste to landfill
by 2030.
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%.
Target to achieve zero
operational waste
to landfill by 2030
3. Food waste
Target: Reduce food waste by 50% by 2030 from
our Financial Year 2019 baseline.
Performance: This year we have achieved a 23%
reduction in food waste against our Financial
Year 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 Financial Year 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.
We raised 211 Thousand Pounds for Social Bite through Festival of
Kindness, a campaign which facilitates donations across all of our
sites
Target to reduce
food waste
by 50%
by 2030
We have increased the proportion of operational waste diverted from
landfill to 98% (Financial Year 2023 97%)
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.
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.
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.
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
40
Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
Task Force on Climate-related Financial Disclosures
('TCFD')
The purpose of this statement is to provide investors and wider stakeholders with an understanding
of Mitchells and 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.
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 and Butlers plc is committed to delivering
the purpose of the organisation; to be the host of lifes
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.
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 Committees 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:
Board oversight of climate-related risks and opportunities
The Board is responsible for the long-term
success of Mitchells and Butlers
plc and has an established framework
in place which enables effective
assessment and management
of risks, including climate-related
risks and opportunities.
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.
Workshops were held with external third parties who
reviewed Mitchells and 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
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.
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 degrees C of warming, 2.4 degrees C of warming
and 4.3 degrees 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.
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 CO2
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.
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.
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Other Information
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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 degrees 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.
Transition risk - Medium to
Long term risk level
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.
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 and 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.
Quantitative analysis considerations
The approach to the quantitative assessment performed took the
Groups 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 ﾣ64.90 per tonne of CO2 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 degrees 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 and 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 degrees 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 and 3 emissions.
Physical risk: Medium
to long-term risk
level
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.
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.
Quantitative analysis considerations
The quantitative assessment performed during Financial Year 2024
involved a detailed analysis of extreme weathers 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.
Transition opportunity: Short to long-term
risk.
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 Groups 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.
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.
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 CO2e
<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
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
tCO2e
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.
Task Force on Climate-related Financial Disclosures continued
Governance
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Other Information
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Summary of quantitative assessment
Potential financial impact on profit in the average year (in Million of Pounds)
Introduction of carbon taxes and levies
Key Assumptions
Time Horizon
RCP2.6
RCP4.5
RCP8.5
Less than 3 years Low Risk
Low Risk
Low Risk
3 to 6 years
Low Risk
Low Risk
Medium Risk
6 to 20 years
Low Risk
Medium Risk
High Risk
Increased severity of extreme weather events
1.Sales risk
Time Horizon
RCP2.6
RCP4.5
RCP8.5
Under 3 years
Low risk
Low risk
Low risk
3 to 6 years
Medium Risk
Medium Risk
Medium Risk
6 to 20 years
Medium Risk
Medium Risk
Medium Risk
2.Supplier costs risk
Time Horizon
RCP2.6
RCP4.5
RCP8.5
Less than 3 years
Low Risk
Low Risk
Low Risk
3 to 6 years
Low Risk
Low Risk
Low Risk
6 to 20 years
Low Risk
Medium Risk
Medium Risk
3.Flood risk
Time Horizon
RCP2.6
RCP4.5
RCP8.5
Less Than 3 yearsLow Risk
Low Risk
Low Risk
3 to 6 years
Low Risk
Medium Risk
Medium Risk
6 to 20 years
Low Risk
Medium Risk
High Risk
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 Financial Year 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 and 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.
Climate-related risk: Greenhouse
gas emissions
Scope 1, 2 and
3. Unit of measure
tCO2e
Absolute Scope 1,2 and 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 and 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
and 2 GHG emissions by 70% by 2030,
compared to a 2019 base year
(aligned to well below 2 degrees
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 and 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 and 2 saw a reduction
of 18% versus
2019 base year.
Climate-related risk: Waste
management. Unit
of measure % of waste
diverted from landfill
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.
Climate-related risk: Food
waste. Unit of measure
Volume of food
waste generated
Yes - Group target set - Halve food waste
by 2030 from 2019 baseline.
Climate-related risk: Proportion
of estate exposed
to flood risk. Unit
of measure: % of estate
blank cell
Physical risk - increased
instances of severe
weather events.
Climate-related opportunity:
Transition
to renewable
energy. Unit
of measure: % and
Megawatt Hour ('MWh')
151 estate sites have been
fitted with solar panels
to date. In Financial
Year 2025 we expect
a further 175 to be
installed.
Climate-related opportunity:
Workforce
competence.
Unit of measure:
Number of employees
to complete
training
Around 18,000 people have
completed the sustainability
training and
sustainability is planned
to be integrated
into inductions
during Financial
Year 2025.
blank cell
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.
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
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
155
159
152
1
15
10
15
11
8
153
14
13
156
Governance
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Other Information
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Risks and uncertainties
Keeping risk under control
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.
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.
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.
First
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.
Second
Third
Risk Decreasing: In July 2023 an increased bank facility of 200
Million Pounds was completed. This new facility contained
a covenant package that provides increased trading headroom
in the unsecured estate.
High-level controls/mitigating activities
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.
High-level controls/mitigating activities
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
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
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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.
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.
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.
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:
Risk Stable: The immediate and future impact of National Living
Wage and wage inflation (together with the impact of the Governments
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.
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
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
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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.
High-level controls/mitigating activities
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 Financial
Year 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:
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.
High-level controls/mitigating
activities
Food:
Drinks:
Energy:
Risk Stable: Risks facing the food supply chain safety
are regarded as stable.
High-level controls/mitigating activities
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.
High-level controls/mitigating
activities
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.
High-level controls/mitigating activities
A full range review was completed in Financial Year 2024 ensuring the correct number
of products and suppliers. This is regularly reviewed.
Ongoing review of energy purchasing policy (covering short-term and medium-term
energy purchasing).
Energy Cost Price and Forecast Reports are produced and monitored.
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
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.
Risks and uncertainties continued
Governance
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
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52
Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
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.
High-level controls/mitigating activities
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.
High-level controls/mitigating
activities
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.
High-level controls/mitigating activities
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 Groups 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
Declining Sales Performance (Risk event 2): 3% lower sales growth
rate on average from December 2024 to end of H1 Financial
Year 2026 and 1% lower thereafter;
The Groups financial planning process comprises a detailed
forecast for the next financial period, together with
a projection for the following two financial years.
Cost of Goods Price Increases (Risk event 8): 2% increase in direct
Cost of Goods (Drink and Food) in Financial Year 2025, and
1% in Financial Year 2026 and Financial Year 2027;
Increased Wage Cost Inflation (Risk event 6): 1% in Financial Year
2026 and Financial Year 2027;
Increased utilities cost (Risk event 8): additional 15 Million Pounds
in Financial Year 2025, 10 Million Pounds in Financial Year
2026 and 5 Million Pounds in Financial Year 2027; and
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
1.2 Billion Pounds 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 200 Million Pounds, 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.
A scenario combining all of the above sensitivities, with some limited
mitigating activities, which reduces operating profit by 48 Million
Pounds, 72 Million Pounds and 93 Million Pounds in Financial
Year 2025, Financial Year 2026 and Financial Year 2027
respectively.
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.
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
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
54
Annual Report and Accounts 2024 Mitchells & Butlers plc
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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:
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:
In carrying out these functions, the Board had regard to those
stakeholders which it had identified as being of significant
importance. These are the Companys shareholders,
those employees of the Mitchells and 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
and Butlers Group or within that Group, governmental
authorities such as HMRC and regulatory bodies,
the Trustees of the Groups 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.
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 Boards 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
Groups 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 and Butlers Group as a whole.
In reaching its decisions, the Board was mindful of
the need to seek to preserve the integrity of the Companys
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.
The Board also confirmed that, in discharging its responsibilities
for management, supervision and
control of the Companys business and its affairs,
it would seek to align to the Mitchells and Butlers
Group PRIDE Values of Passion, Respect,
Innovation, Drive and Engagement as set
out on page 27 of this Annual 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)
Adjusteda (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 salesa growth.
Like-for-like salesa in the first half increased by 7.0%, comprising an increase in like-for-like food salesa of 7.7% and of like-for-like drink salesa 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 salesa:
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%
The current underlying rate of growth of
like-for-like salesa, 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 sharea 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 marginsa
Adjusted operating profita 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 salesa 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
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Annual Report and Accounts 2024 Mitchells & Butlers plc
Strategic Report
Strategic Report
Financial review
Our financial and operating performance
"On a statutory basis, profit/(loss) before tax for the financial year
was 199 Million Pounds (Financial Year 2023 (13 Million Pounds)),
on sales of 2,610 Million Pounds (Financial Year 2023
2,503 Million Pounds)." Tim Jones, Chief Financial Officer
Last year, Financial Year 2023, was a 53-week reporting period therefore 52-week results are additionally disclosed for year-on-year comparison purposes.
Type
Statutory Financial
Year 2024
in Million of
Pounds
Statutory Financial
Year
2024 (53
week) in
Million of
Pounds
Adjusted Financial
Year
2024 in Million
of Pounds
Adjusted Financial
Year
2023 (52
Week) in
Million of
Pounds
Revenue
Total revenue of 2,610 Million Pounds (Financial Year 2023 2,503 Million Pounds) reflects a strong period of trading driven by sustained like-for-like sales growth.
Like-for-like sales in the first half increased by 7.0%, comprising an increase in like-for-like food sales of 7.7% and of like-for-like drink sales 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. The Directors use a number of alternative performance measures (APMs) that are considered critical
to aid the understanding of the Groups performance. Key measures are explained on pages 186 to 189 of this report.
Like-for-like sales:
Weeks 1 to 15
Q1
Weeks 16 to
28 Q2
Weeks 29 to
42 Q3
Weeks 43 to
52 Q4
Weeks 1 to
52 YTD
The current underlying rate of growth of like-for-like sales, 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%.
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 Groups freehold
and long leasehold land and buildings (as set out in Section
3 of the notes to the financial statements), a 14 Million Pounds
reduction in value is recognised relating to valuation and
impairment of properties, comprising a 4 Million Pounds increase
in value arising from the revaluation of freehold and long
leasehold sites, a 17 Million Pounds impairment of right-of-use
assets and a 1 Million Pounds impairment of computer
software. The 4 Million Pounds tax credit relates to these
impairments.
Other separately disclosed items include a net profit arising on
property disposals of 2 Million Pounds. Refer to note 2.2 for
comparative information.
Operating profit and margins
Adjusted operating profit was 312 Million Pounds (Financial Year
2023 221 Million Pounds), 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 growth,
reduced cost inflation and operating efficiencies. Statutory
operating profit was 300 Million Pounds (Financial Year
2023 98 Million Pounds) with statutory operating profit margin
of 11.5% (Financial Year 2023 3.9%).
financial year was slightly less than 3% of our cost base of c. 2 billion
pounds, after some offset from deflation in energy prices.
Looking forward, cost headwinds are now anticipated to
increase to c. 100 Million Pounds for Financial Year 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
Interest Net
Net finance costs of 99 Million Pounds (Financial Year 2023 108
Million Pounds) for the financial year were 9 Million Pounds lower
than the same period last year. The net pensions finance charge
was 2 Million Pounds (Financial Year 2023 3 Million Pounds).
This is anticipated to be a credit of 7 Million Pounds this
year, Financial Year 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 (Financial Year 2023
earnings (0.7)p), with adjusted earnings per share of 26.4p
(Financial Year 2023 15.6p on 52-week basis).
The basic weighted average number of shares in
the period was 595 Million and the total number
of shares issued at the balance sheet date
was 598 Million.
Cash Flow Table
Financial Year
2024 in
Million of Pounds
Financial Year
2023 in Million
of Pounds
blank
blank
blank
blank
blank
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 444 Million Pounds, which converted to net cash inflow for the period before bond amortisation of 185 Million Pounds (Financial
Year 2023 30 Million Pounds) 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 123 Million Pounds (including net impact of currency swaps), cash inflow was 62 Million Pounds
(Financial Year 2023 outflow 86 Million Pounds).
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 debta 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
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
58
Annual Report and Accounts 2024 Mitchells & Butlers plc
Other Information
Financial Statements
Strategic Report
Introduction
Governance
Mitchells & Butlers plc Annual Report and Accounts 2024
59
Strategic Report
Capital expenditure
Capital expenditure of 154 Million Pounds (Financial Year 2023 157 Million Pounds, including 3 Million Pound intangible assets) comprises 152 Million Pounds from the purchase of property,
plant and equipment and 2 Million Pounds in relation to the purchase of intangible assets.
Capital Expenditure Table
Financial Year 2024 in Million of PoundsFinancial Year
2024: Number
Financial Year
2023 in
Million of Pounds
Financial
Year
2023:
Number
Maintenance and infrastructure
58
blank
67
blank
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
blank
157
blank
Maintenance and infrastructure spend included investment
of 9 Million Pounds towards our sustainability ambitions,
such as solar panels and electrified kitchen equipment,
as well as 4 Million Pounds towards digital and technological
improvements. Maintenance and infrastructure
spend was slightly lower than prior year due to
reduced spend on IT infrastructure and hardware.
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 35 Million Pounds of historic contributions
was made to the Group from amounts held in escrow
with respect to the Main Plan. A further return of 12 Million
Pounds, 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 25
Million Pounds.
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 Trustees agreed use of the surplus
compared to prior years the full value of the surplus of
164 Million Pounds is now recognised in this years accounts
as an economic benefit to the company.
Net debt and facilities
On the back of a strong cash performance, net debt at the period
end reduced to 1,436 Million Pound, comprised of 989 Million
Pound non-lease liabilities and lease liabilities of 447 Million
Pound (Financial Year 2023 1,633 Million Pounds comprised
of 1,170 Million Pound non-lease liabilities and lease liabilities
of 463 Million Pound). This represents a multiple of 3.2
times EBITDA over the last year including lease liabilities (2.2
times excluding these liabilities).
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
In this section
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
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
60
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Highest ever retail engagement score
(beating Financial Year 2023s
record high): 85.3
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
Executive Directors' Company pension contributions
were fully aligned with that of the wider
workforce (4%) on 1 January 2024
Attendance levels at Board and Committee meetings
Focus areas for Financial Year 2025
Growth
Strategy
Deliver our strategic plan delivering targeted and profitable
growth.
Sustainability
People
Risk
Reduce the impact of key risks facing the business.
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.
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
Phil Urban (CEO)
Tim Jones (CFO)
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
and 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 Companys 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.
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.
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
62
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Chairs introduction to 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 Boards 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 Groups 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 Companys 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 Codes
best practice guidance.
Sales growth remained robust over Financial Year 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.
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 Financial Year 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 Financial Year 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 Boards 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.
Bob Ivell, Chair, Mitchells
and Butlers plc
Board of Directors
A strong leadership team
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.
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
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.
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.
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
65
64
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Board of Directors
A Strong Leadership Team
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.
Bob Ivell, Non-Executive Chair. Remuneration
Committee, Nomination
Committee, Market Disclosure
Committee, Corporate
Responsibility Committee,
Pensions Committee
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 and N
plc as Chair and Managing Director of its Scottish and 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 Whitbreads 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.
Phil Urban, Chief Executive.
Market Disclosure
Committee, Executive
Committee, Pensions
Committee.
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 and Newcastle
Retail's Restaurants and Accommodation
Division. Phil has an MBA and is
a qualified management accountant ('CIMA').
Tim Jones, Chief Financial Officer. Market
Disclosure Committee, Executive
Committee, Pensions Committee.
Amanda Brown, Non-Executive Director.
Audit Committee, Remuneration
Committee, Nomination
Committee, Corporate Responsibility
Committee
Keith Browne, Non-Executive Director.
Pensions Committee.
Dave Coplin, Non-Executive Director.
Audit Committee, Remuneration
Committee, Nomination
Committee, Corporate Responsibility
Committee
Eddie Irwin, Non-Executive Director. Nomination
Committee, Corporate Responsibility
Committee
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 and 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.
Josh Levy, Non-Executive Director. Remuneration
Committee, Pensions Committee.
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 and 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, Australias largest integrated
cattle and beef producer.
Jane Moriarty, Senior Independent Director. Audit
Committee, Remuneration Committee, Nomination
Committee, Corporate Responsibility
Committee, Market Disclosure
Committee.
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.
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 capitala
Odyzean Limitedb
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
66
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Directors' report
The Boards responsibilities in respect of the Company include:
For Financial Year 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 Companys approach and practices in relation to the 2018 Code.
Areas of operation
During Financial Year 2024, the Group had activities in, and operated through,
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.
Share capital and voting rights
The Companys 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 Companys 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.
During the period, shares with a nominal value of ﾣ28,257 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.
Dividends
No Final Dividend will be paid in respect of the financial period ended 28 September
2024 (Financial Year 2023 nil). No Interim Dividend was paid during
the period (Financial Year 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.
Shareholder
Ordinary shares% of share
capital
(See
Note
A in Table
Summary)
Holding Type
Odyzean Limited (See Note
B in Table Summary)
338,833,695
56.66%
Indirect holding
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
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.
Major shareholder Board representation and relationship agreement
The Companys largest shareholder is Odyzean Limited ('Odyzean'), which holds
approximately 56.66% of the Companys issued share capital and was formed
in 2021 to consolidate the shareholdings of the Companys 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 Odyzean Group has representatives on the Board, nominated by Piedmont and Elpida respectively.
Piedmonts 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 Councils report
of August 2014 'Towards Clear and 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.
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 and 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.
Directors’ report continued
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.
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.
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;
• ‘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.
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
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
69
68
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
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 Companys auditor.
Articles of Association
The Articles of Association may be amended by special resolution of the
shareholders of the Company.
Conflicts of interest
The Companys 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 arms-length
basis and are properly recorded.
The related party transactions in Financial Year 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.
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 and 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.
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 Financial Year 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:
Type
'Mable', the Mitchells and Butlers online learning platform;
Page(s)
weekly bulletins - specifically targeted at retail house managers and mobile workers;
and
Employment policies
The Group employed an average of 50,455 people in Financial Year 2024 (Financial Year 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 Companys 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.
Employee engagement
Mitchells and 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:
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 Financial Year 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.
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 and
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.
Directors’ report continued
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.
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 our people 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:
FU
N
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.
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
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
71
70
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
The Mitchells and 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 and Butlers
offers a number of important differentiators which our employees value:
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 our people to SERVE WITH PRIDE (as
they have since 1898!). In return, we offer: Like
many employers, opportunities for progression,
challenge, fair rewards and safety and
security. But unlike many employers, also: A
better lifestyle, More job satisfaction, A great atmosphere,
because of the sense of community,
because its both fun because of the
flexibility and convenience the feeling of belonging,
the shared and friendly purpose, the variety
of work and pride in their achievements. All
this adds up to our big promise, that youll love
every moment
Share ownership
Mitchells and Butlers is keen to encourage greater employee involvement in the Groups 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.
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 Financial Year 2024.
Responsible alcohol policy
Mitchells and 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.
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.
Flexibility and convenience: Mitchells and 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.
Modern Slavery Act 2015
More job satisfaction: As part of our research, we learnt that working for Mitchells and 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.
This statement covers the Companys commitment to operating and conducting its business in
such a way that human rights are respected and protected. Mitchells and 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 and 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.
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 Groups 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
and Butlers Finance plc (and associated liquidity facility) and 200 Million Pounds of unsecured
committed bank facilities (increased by 50 Million Pounds 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.
During Financial Year 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 Million Pound turnover have decreased by 8% in Financial
Year 2024 in comparison to Financial Year 2023. Market-based GHG emissions per Million
Pound turnover have decreased by 11% for the same period. Absolute emissions for Scope
1 and 2 (location- and market- based) have decreased by 6%. This is due to the following
key factors:
1. Financial Year 2024 contains seven fewer days when compared to Financial Year 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 Financial Year 2024 compared to Financial Year 2023.
We have also continued with our commitment to purchase a green, REGO-backed supply of electricity
from renewable sources in Financial Year 2024.
Directors’ report continued
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 tCO2e
(location-based)
82,311
2,219
84,530
88,960
2,342
91,302
-7%
Scope 2 tCO2e
(location-based)
64,927
1,780
66,707
67,156
1,769
68,925
-3%
Total Scope 1 & 2 emissions tCO2e
(location-based)
147,238
3,999
151,237
156,116
4,111
160,227
-6%
Total Scope 1 & 2 emissions tCO2e
(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: tCO2e/turnover (£m)
– (location-based)a
–
–
59
–
–
64
-8%
Intensity Ratio: tCO2e/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
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 CO2e 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.
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
73
72
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Information
Financial Year 2024
All bars and restaurants either owned or under operational control during Financial Year 2024 were included.
General classifications of greenhouse gas emissions scopes based on the GHG protocol and ISO14064-1:2006
General classifications of greenhouse gas emissions scopes based on the GHG protocol and ISO14064-1:2006
within the context of the Groups 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 Groups value chain but occurring from sources
not owned or controlled by the Group. This assessment focuses on Scope 1 and 2 emissions only
(Scope 3 is optional under the current regulations).
Scope 1 and 2 emissions are reported for both Financial Year 2024 and Financial Year 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.
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.
Scope 1 - Fugitive Emissions are partially estimated due to unknown gas types for some sites. Scope 1
and 2 - Electricity and gas consumption uses a pro-rata estimate for supplies that do not have complete
data in the reporting year.
Emissions are stated in tonnes CO2e per Million Pound revenue. This intensity ratio puts emissions into
context given the scale of the Groups activities and enables comparison with prior year performance.
Emissions during Financial Year 2023 are provided for comparative purposes.
Energy efficiency action taken
During Financial Year 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 Financial Year 2025 and beyond.
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 and 2 emissions.
Current Reporting
Period
Financial
Year
2024: UK
and offshore
Current Reporting
Period
Financial
Year
2024: Global
(excluding
UK
and offshore)
Current Reporting
Period
Financial
Year
2024: Total
Comparison reporting
period
Financial
Year
2023: UK
and offshore
Comparison
reporting
period
Financial
Year
2023: Global
(excluding
UK
and offshore)
Comparison reporting
period
Financial
Year
2023: Total
% Change, year-on-
Intensity Ratio: tCO2e/turnover in Million
Pounds, Location-based (See
Note A in Table Summary)
blank
blank
blank
blank
Intensity Ratio: tCO2e/turnover in Million
Pounds, Location Based (See
Note A in Table Summary)
blank
blank
blank
blank
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 Companys
auditor is aware of that information.
Andrew Freeman, Group General Counsel and Company
Secretary, 26 November 2024
Statement of Directors’ responsibilities in respect of the
Annual Report and Accounts
Corporate governance statement
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
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
74
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Statement of Directors' responsibilities in respect of the Annual Report
and Accounts
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:
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:
Tim Jones, Chief Financial
Officer, 26 November
2024
"This statement sets out our report to shareholders
on the status of our corporate
governance arrangements." Bob
Ivell, Chair.
Shareholder relations
Corporate governance statement continued
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.
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.
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).
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.
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
77
76
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
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.
Corporate governance arrangements during Financial Year 2024
In Financial Year 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 Financial Year 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 Groups 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:
Corporate governance code reporting
For Financial Year 2024, the Company has reported under the 2018 Code.
Its requirements include:
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 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 with the Companys remuneration policy. This commenced
in Financial Year 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 and 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 Financial Year 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 Companys 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.
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 and Butlers practice that strategic proposals
put to the Companys 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 2018 Code specifically requires that the Board should understand the views of the Companys
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
and 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 and 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.
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.
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 Boards 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 Companys
tier 1 to tier 4 ranking (which is a multi-factor process involving criticality, volume, spend
size and availability of substitute products).
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.
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.
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.
Corporate governance statement continued
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
79
78
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
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 Boards 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).
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
blank
blank
blank
blank
Asian/Asian British
blank
blank
blank
blank
Black/African/Caribbean/Black British
blank
blank
blank
blank
Other ethnic group
blank
blank
blank
blank
Not specified/prefer not to say
blank
blank
blank
blank
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 Companys diversity and inclusion arrangements. The Company has had a Board Diversity Policy in place
for some time, but during Financial Year 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 Financial Year 2021 and continued in Financial Year 2022, Financial Year 2023 and Financial Year 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.
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 Chairs 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 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
Companys 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 Financial Year 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 Companys
shareholder base and demonstrates the Odyzean Groups 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.
1. Chairs 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."
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 Financial Year 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.
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 Directora
09/05/11
14/07/11
Interim Chaira
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 Browneb
Non-Executive Director
22/09/16
–
Dave Coplin
Independent Non-Executive Director
29/02/16
–
Eddie Irwinb
Non-Executive Director
21/03/12
–
Tim Jones
Chief Financial Officer
18/10/10
–
Josh Levyc
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.
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
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
81
80
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
3. Constitution of Committees
Throughout Financial Year 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 Groups 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 Financial Year 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 Financial Year
2024 and the Board will consider if it is appropriate to carry out any such evaluations, in Financial
Year 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)
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 Financial Year 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 Financial Year 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 Financial Year 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 Groups 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 Financial Year 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 Financial Year 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 Financial Year 2025.
Directors
The following were Directors of the Company during the year ended 28 September 2024:
Directors who served
during the year
Role
Independent Non-Executive Director (See Note A in Table Summary)
Interim Chair (See Note A in Table Summary)
blank
blank
Keith Browne (See Note
B in Table Summary)
blank
blank
Eddie Irwin (See Note
B in Table Summary)
blank
blank
Josh Levy (See Note
C in Table Summary)
blank
blank
blank
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 and Butlers policy is that Executive Directors may be permitted to accept one external
Non-Executive Director appointment with the Boards prior approval and as long as this
is not likely to lead to conflicts of interest. During Financial Year 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.
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.
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.
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.
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
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
83
82
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
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.
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.
Non-Executive Directors
The Company has experienced Non-Executive Directors on its Board.
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
Groups business is enhanced by business specific presentations and operational
visits to the Groups businesses. Separate strategy meetings and
meetings with senior executives and representatives of specific functions,
brands or business units are also held throughout the year.
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.
Committees
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.
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:
Nomination Committee Member
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 Financial Year 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.
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:
Progress against the policy:
The Board continues to monitor progress against this policy. In terms of Board
diversity, at the start and end of Financial Year 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 Chairs 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 and Inclusion Policy (last updated in
September 2024), which applies in relation to employees of the Mitchells and
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.
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.
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 Financial Year 2021.
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.
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.
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
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
85
84
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
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 Groups 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 Companys relationship with its various pension schemes and
their trustees.
Throughout Financial Year 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 and Butlers Pension Plan which moved to a full
buy-in with Standard Life during Financial Year 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.
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 Companys 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:
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 Financial Year 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:
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:
TFCD
Table
Recommendations
Recommended
Disclosures
(b) Disclose Scope 1, Scope 2 and,
if appropriate, Scope 3 greenhouse
gas ('GHG') emissions
and the related risks.
blank
For Financial Year 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 Financial Year 2023 disclosure. The results of this are set out on pages
40 to 45 of the Strategic Report.
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.
• 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.
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.
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.
Corporate governance statement continued
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
87
86
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
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:
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
companys accounts.
2. Actions taken by the Company
Executive ownership
The Board tasked Phil Urban with spearheading the Companys 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 Companys 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 Groups
sustainability roadmap through which it identified and agreed how to
manage climate-related issues. These initiatives were first addressed in Financial
Year 2022 when TCFD compliance became compulsory for the Company
and is ongoing.
Risk and scenario analysis
a 'comply or explain' obligation to explain: - if they have not included disclosures
consistent with all of the TCFDs 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.
During Financial Year 2022, the Company developed a rigorous climate change scenario impact analysis.
In Financial Year 2023 we reassessed all of the climate-related risks identified in the Financial
Year 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 Financial Year 2024.
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 Companys 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.
Processes, including monitoring by the Board, in respect of:
An overall governance framework including:
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:
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.
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.
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.
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
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
88
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
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 Committees
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 Councils ('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 Groups 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.
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 Committees responsibilities
also include:
The Audit Committee met at least quarterly during Financial Year 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.
Summary terms of reference
The Audit Committees 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 Financial
Year 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 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.
Audit Committee report continued
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.
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.
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
• 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.
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
91
90
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
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
Groups key risks or in response to developing issues.
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:
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.
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 Financial Year 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 Groups
key business processes and functions that could be subject to audit.
A similar approach has been employed in relation to the Financial Year 2025 internal audit plan.
The principal objectives of the internal audit plan for Financial Year 2024 were, and remain
for Financial Year 2025:
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:
Key risks identified are reviewed and assessed on a quarterly basis in terms of their likelihood and
impact, and are measured on the Groups '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 Financial Year 2024, Risk Committee meetings continued to include
a cross-functional, detailed review of the Groups key risks. This process continues to prove
to be effective and adds value to the continued development and progression of the Groups
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 Groups 'Key Risk
Heat Map'.
Confidential reporting
The Groups 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 Groups 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 Financial Year 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 Financial Year 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 auditors 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 Financial
Year 2024 and a copy of it is appended to the Audit Committees terms of reference and
is available on the Groups 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.
External audit annual assessment
The Audit Committee assesses annually the qualification, expertise, resources and independence
of the Groups 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 Committees agenda
during the year.
In the prior year, the Financial Year 2022 audit of Mitchells and Butlers plc by KPMG was reviewed
by the FRCs Audit Quality Review team ('AQR') as part of the FRCs 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 managements 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:
Jane Moriarty, Chair of the Audit
Committee, 26 November
2024
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 salesa 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.
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 marketb consistently over the year.
Adjusted Operating Profita 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.
85.3
Best ever employee
engagement score
4.51
Record guest review scores
41%
(52 week basis)
Adjusted Operating Profita
1.7%
Average market
outperformance over
the year
5.3%
Like-for-Like Sales Growth
Strategic Report
Financial Statements
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
93
92
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
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
5.3% Life-for-Like Sales Growth, 1.7% Average
market outperformance over the
year, 4.51 Record guest review scores,
85.3 Best ever employee engagement
score, 41% (52 week basis)
Adjusted Operating Profit (The Directors
use a number of alternative performance
measures (APMs) that are considered
critical to aid the understanding
of the Groups performance.
Key measures are explained
on pages 186 to 189 of this Report.)
Dear Shareholder,
I am pleased to present this years 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 Financial Year 2024 performance and pay. The report, together with this letter, will
be put to an advisory vote at the 2025 AGM.
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 and Butlers performance over Financial Year 2024 has been exceptionally
strong. Like-for-like sales 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. (The Directors use a number of alternative
performance measures (APMs) that are considered critical to aid the understanding of the
Groups performance. Key measures are explained on pages 186 to 189 of this Report. )
Remuneration in Financial Year 2024
Annual Bonus
Financial measures Adjusted Operating Profit (outcome 70% out of 70%)
The financial targets for Financial Year 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 Financial Year 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 65 Million Pounds to be offset through improved margins and efficiencies.
Actual sales across the period were 2,610 Million Pounds, an increase of 6.1%. On a like-for-like
basis sales increased by 5.3%. Our sales performance continued to outperform the
market consistently over the year. (As measured by the CGA Business Tracker.)
Adjusted Operating Profit across the period was 312 Million Pounds; 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 (269 Million Pounds), 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.(The Directors use a
number of alternative performance measures (APMs) that are considered critical to aid the understanding
of the Groups performance. Key measures are explained on pages 186 to 189 of
this Report.)
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 Financial
Year 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 Financial Year 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.
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
Other Information
Financial Statements
Strategic Report
Introduction
Governance
Mitchells & Butlers plc Annual Report and Accounts 2024
95
Governance
The information below summarises the Financial Year 2024 annual bonus performance for our Executive Directors.
255.5 Million Pounds
269 Million Pounds
277 Million Pounds. Actual:
312 Million Pounds
Guest health Review Score Complaint
Ratio (See table summary
for more details)
2. Actual: 2
83.5. Actual: 85.3
96.2%. Actual: 97.3%
blank
blank
blank
Financial Year 2022 RSP Vesting
During Financial Year 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.
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 Financial
Year 2022 RSP awards and therefore has determined that no adjustment
is required.
Remuneration for Financial Year 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.
With effect from 1 January 2025 Phil Urbans salary will increase to 625,725 pounds
(3%) and Tim Joness to 523,250 pounds (3%).
Annual Bonus
The Committee believes that the annual bonus scheme for Financial Year 2024
was successful in driving the right behaviours across the business, and
as such has determined that the annual bonus scheme for Financial Year
2025 will be unchanged. The maximum opportunity will remain at 100%
of salary for our Executive Directors.
A PSP award is due to be made in respect of the Financial Year 2025 to Financial
Year 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 and 3 emissions (10%). Full details of the proposed
performance measures and targets are set out on page 106.
In conclusion, Financial Year 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 Financial Year 2024 outcomes at the 2025 AGM.
Amanda Brown, Chair of the Remuneration
Committee, 26 November 2024
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
Current shareholding
Shareholding requirements
Owned shares
Outstanding unvested shares not subject to further performance conditions
Outstanding unvested shares subject to further performance conditions/underpins
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.
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).
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
Mitchells & Butlers’ remuneration principles
Appropriateness of remuneration decisions
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
96
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Remuneration at a glance
Financial Year 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.
Year
20162017
2018
2019
2020 2021
2022
2023
2024
Base
Pay
509 Thousand
Pounds
518 Thousand
Pounds
509 Thousand
Pounds
516 Thousand
Pounds
468 Thousand
Pounds
534 Thousand
Pounds
546 Thousand
Pounds
581 Thousand
Pounds
599 Thousand
Pounds
Benefits
15 Thousand
Pounds
15 Thousand
Pounds
16 Thousand
Pounds
16 Thousand
Pounds
15 Thousand
Pounds
14 Thousand
Pounds
15 Thousand
Pounds
15 Thousand
Pounds
15 Thousand
Pounds
Pension
89 Thousand
Pounds
91 Thousand
Pounds
89 Thousand
Pounds
91 Thousand
Pounds
70 Thousand
Pounds
76 Thousand
Pounds
64 Thousand
Pounds
40 Thousand
Pounds
26 Thousand
Pounds
Annual
Bonus
blankblank 146 Thousand
Pounds
423 Thousand
Pounds
blank blank 182 Thousand
Pounds
552 Thousand
Pounds
599 Thousand
Pounds
Long-term
Incentives
blankblank blank 879 Thousand
Pounds
blank blank blank
390 Thousand
Pounds
680 Thousand
Pounds
Total
613 Thousand
Pounds
624 Thousand
Pounds
760 Thousand
Pounds
1,925 Thousand
Pounds
553 Thousand
Pounds
624 Thousand
Pounds
807 Thousand
Pounds
1,578 Thousand
Pounds
1,919 Thousand
Pounds
Year20162017
2018
2019
2020
2021
2022
2023
2024
Base
Pay
425
Thousand
Pounds
518 Thousand
Pounds
425 Thousand
Pounds
432 Thousand
Pounds
391 Thousand
Pounds
447 Thousand
Pounds
457 Thousand
Pounds
486 Thousand
Pounds
501 Thousand
Pounds
Benefits
15 Thousand
Pounds
16 Thousand
Pounds
16 Thousand
Pounds
16 Thousand
Pounds
15 Thousand
Pounds
14 Thousand
Pounds
15 Thousand
Pounds
16 Thousand
Pounds
16 Thousand
Pounds
Pension
75 Thousand
Pounds
76 Thousand
Pounds
75 Thousand
Pounds
76 Thousand
Pounds
59 Thousand
Pounds
63 Thousand
Pounds
53 Thousand
Pounds
34 Thousand
Pounds
22 Thousand
Pounds
Annual
Bonus
blank
122 Thousand
Pounds
354 Thousand
Pounds
blank blank 152 Thousand
Pounds
462 Thousand
Pounds
501 Thousand
Pounds
Long-term
Incentive
blank
blank 514 Thousand
Pounds
blank blank blank 326 Thousand
Pounds
569 Thousand
Pounds
Total515
Thousand
Pounds
526 Thousand
Pounds
638 Thousand
Pounds
1,392 Thousand
Pounds
465 Thousand
Pounds
524 Thousand
Pounds
677 Thousand
Pounds
1,324 Thousand
Pounds
1,609 Thousand
Pounds
Appropriateness of 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
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 Financial Year 2024 this was 299.7p (Financial Year 2023 219.8p).
Phil Urban (Current salary 607,500 pounds)
246% Owned
Shares
250% Shareholding
Requirements
328% Outstanding
unvested
shares
not subject
to further
performance
conditions
873% Outstanding
unvested
shares
subject
to further
performance
conditions/underpins
Tim Jones (Current salary 508,000 pounds)
229% Owned
Shares
200% Shareholding
Requirements
305% Outstanding
unvested
shares
not subject
to further
performance
conditions
852% Outstanding
unvested
shares
subject
to further
performance
conditions/underpins
Mitchells and Butlers' remuneration 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 Directors 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.
Report on Directors’ remuneration continued
Overview of remuneration policy and its implementation
for FY 2025
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.
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
98
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Alignment of Executive pay to strategy
Strategic Priority
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.
Yes
Yes
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.
Yes
Blank
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.
Yes
Blank
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.
Yes
Yes
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.
Yes
Blank
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.
Yes
Blank
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.
Yes
Yes
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.
Yes
Blank
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.
Yes
Blank
Overview of remuneration policy and its implementation for Financial
Year 2025
Policy: Increases in line with wider workforce,
except for exceptional circumstances.
Year and Duration:
2025
blank
Policy: 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. Executive Directors
contributions
Year and Duration:
2025
Implementation for 2025: In line with
Financial Year 2024.
Policy: Executive Directors contributions aligned with
the wider workforce pension rate (currently 4% of
salary).
Year and Duration:
2025
Implementation for 2025: Unchanged
Phil Urban: 4% of
salary. Tim Jones: 4% of salary.
Short-term incentives
Policy: 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.
Year and Duration: 2025
to 2027
Implementation for 2025: The following
maximum opportunities will apply
in Financial Year 2025 (unchanged).
Phil Urban: 100% of salary.
Tim Jones: 100% of salary.
Long-term incentives
Policy: 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. 250% of salary for the CEO;
200% of
Year and Duration: 2026
to 2029
Implementation for 2025: The following maximum
opportunities will apply in Financial
Year 2025 (unchanged). Phil Urban:
200% of salary. Tim Jones: 200% of salary.
Performance measures for Financial
Year 2025 are: Operating Cashflow
(70%) Adjusted EPS (20%) Sustainability
(Scope 1,2 and 3) (10%)
Shareholding requirement
Policy: 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.
Year and Duration: 2025
to 2029
At start of Financial
Year
2024
At start of
Financial
Year
2025
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
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. 1,100)
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
100
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
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
Remuneration
Type
Minimum On-target Maximum Maximum
Plus
50%
Share
price
gain
Financial Year
2023
Actual
Financial Year
2024 Actual
Fixed
Pay
100%
41.5%
26.2%
21.0%
40.3%
33.4%
Short-term
Incentives
blank
19.5%
24.6%
19.75%
35.0%
31.2%
Long-term
Incentives
blank
39.0%
49.2%
39.5%
24.7%
35.4%
Share
price
gain
Share
blank
blank
19.75%
blank
blank
Total
665,754 Pounds
1,604,342
Pounds
2,542,929
Pounds
3,168,654
Pounds
1,578,000 1,919,000
Chief Financial Officer
Remuneration
Type
Minimum On-target Maximum Maximum
Plus
50%
Share
price
gain
Financial Year
2023
Actual
Financial Year
2024
Actual
Fixed
Pay
100%
41.6%
26.3%
21.1%
40.5%
33.5%
Short-term
Incentives
blank
19.5%
24.6%
19.7%
34.9%
31.1%
Long-term
Incentives
blank
38.9%
49.1%
39.4%
24.6%
35.4%
Share
price
gain
blank
blank
blank
19.8%
blank
blank
Total
560,180 Pounds
1,345,055
Pounds
2,129,930
Pounds
2,653,180
Pounds
1,324,000
Pounds
1,609,000 Pounds
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:
Maximum
In addition to the minimum, maximum payment is achieved under both the short-
and long-term incentive plans such that:
Share price gain
This shows the impact a 50% increase in the share price would
have on the maximum PSP outcome.
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), Executive
Committee (8), Senior
management (c. 40)
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.
Retail Support Centre (c. 1,100),
Retail managers (c. 5,500)
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.
blank
All employees can participate
in any of the all-employee
share schemes,
subject to qualifying
service, building
a stake in the business.
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.
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.
All employees can participate
in any of the all-employee
share schemes,
subject to qualifying
service, building
a stake in the business.
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:
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.
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
benefitsa
£000
Short-term
incentives
£000
Pension-
related
benefitsb
£000
Long-term
incentivesc
£000
Otherd
£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 belowa:
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%)
£312mb
(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
102
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
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 Financial Year 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.
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 and 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
Financial Year 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.
Annual report on remuneration
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 Financial Year 2025. This report, along with the Chairs 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.
Basic Salaries,
Financial
Year
2024
Basic Salaries,
Financial
Year
2024
Taxable
Benefits,
Financial
Year
2024
(See
note
A
in Table
Summary)
Taxable
Benefits,
Financial
Year
2023
(See
note
A
in Table
Summary)
Short-term
incentives,
Financial
Year
2024
Short-term
incentives,
Financial
Year
2023
Pension-related
benefits,
Financial
Year
2024
(See
note
B
in Table
Summary)
Pension-related
benefits,
Financial
Year
2023
(See
note
B
in Table
Summary)
Long-term
incentives,
Financial
Year
2024
(See
note
C
in Table
Summary)
Long-term
incentives,
Financial
Year
2023
(See
note
C
in Table
Summary)
Other,
Financial
Year
2024
(See
note
D
in Table
Summary)
Other,
Financial
Year
2023
(See
note
D
in Table
Summary)
Total Remuneration,
Financial
Year
2024
Total Remuneration,
Financial
Year
2023
Total fixed
pay,
Financial
Year
2024
Total fixed
pay,
Financial
Year
2023
Total variable
pay,
Financial
Year
2024
Total variable
pay,
Financial
Year
2023
Phil Urban 599,000
Pounds
581,000
Pounds
15,000
Pounds
15,000
Pounds
599,000
Pounds
552,000
Pounds
26,000
Pounds
40,000
Pounds
680,000
Pounds
390,000
Pounds
2,500
Pounds
3,000
Pounds
1,921,500
Pounds
1,581,000
Pounds
642,500 Pounds
639,000
Pounds
1,279,000
Pounds
942,000
Pounds
Tim Jones 501,000
Pounds
486,000
Pounds
16,000
Pounds
16,000
Pounds
501,000
Pounds
462,000
Pounds
22,000
Pounds
34,000
Pounds
569,000
Pounds
326,000
Pounds
2,000
Pounds
2,000
Pounds
1,611,000
Pounds
1,326,000
Pounds
541,000 Pounds
538,000
Pounds
1,070,000
Pounds
788,000
Pounds
Subtotal Executive
Directors
1,100,000
Pounds
1,067,000
Pounds
31,000
Pounds
31,000
Pounds
1,100,000
Pounds
1,014,000
Pounds
48,000
Pounds
74,000
Pounds
1,249,000
Pounds
716,000
Pounds
4,500
Pounds
5,000
Pounds
3,532,500
Pounds
2,907,000
Pounds
1,183,500
Pounds
1,177,000
Pounds
2,349,000
Pounds
1,730,000
Pounds
Annual bonus
Details of the measures and targets applying to the 2024 annual bonus plan are set out below (The measures, targets and outcomes
are not audited.)
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)
255.5 Million Pounds (7.5%)
269 Million
Pounds
(35%)
277 Million Pounds
(70%)
312 Million Pounds
(70%)
(Payout
is on
a straight-line
basis
between
points.)
Threshold
Target
Performance
Performance
Score
Calculation of outcome (% of salary payable) Outcome (%
of salary
payable)
Guest Health (15%) blank
blank
blank
blank
Each element is scored 1 if better than target,
0 if between threshold and target, and
-1 if below threshold.
blank
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
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%).
blank
Measure Type
Threshold (% of salary payable)
Target (% of
salary payable)
Maximum (%
of salary
payable)
Outcome (%
of salary
payable)
Employee Engagement (10%) (The measures, targets
and outcomes are not audited.)
81.5 (2.5%)
82.5 (5%)
83.5 (10%) 85.3 (10%)
(5%)
blank
(5%)
blank
(5%)
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 market1 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.
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 tCO2e
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 dateb
Face valuec
£
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
104
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Financial measures
Adjusted Operating Profit (Outcome 70% out of 70%)
The financial targets for Financial Year 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 Financial Year 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. 65 Million Pounds to be offset through improved
margins and efficiencies.
Actual sales across the year were 2,610 Million Pounds, an increase of 6.1% and c. 25 Million Pounds ahead of budget. On a like for like basis sales increased by 5.3%. Our sales performance continued
to outperform the market consistently across the year. (As measured by the CGA Business Tracker.)
Adjusted Operating Profit across the period was 312 Million Pounds; 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 (269 Million Pounds) and the performance required to for a maximum
payout (277 Million Pounds). 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 Financial Year
2023, with just 0.60 complaints for every 1,000 meals served in Financial Year 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,
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 Financial Year 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 Pounds and 500,750 Pounds
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.
Long-term incentives vesting during the year
Financial Year 2022 to 2024 RSP vesting
During Financial Year 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.
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;
" 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
" 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 Companys strategic priorities.
Long-term incentive awards made during Financial Year 2024
An award for Financial Year 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 and 3 emissions (10%).
Financial Year 2024 - 2026 PSP performance conditions
Operating Cashflow (Million Pounds)
Sustainability reduction in Scope 1, 2 and 3 emissions tCO2e
Market price
per share
used to
determine
the
award (p)
(See Note
A in table
summary)
Latest lapse
date (See
Note B
in table summary)
Face value in
Pounds (See
Note C
in table summary)
blank
blank
blank
blank
blank
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 tCO2e
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.
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
106
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
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
blank
Tim Jones
700
2/7/24
287
2/7/27
n/a
blank
Total
1,562
blank
blank
blank
blank
blank
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 Financial Year 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 Urbans salary will increase to 625,725 Pounds (3%) and Tim Jones's to 523,250 Pounds (3%).
Annual Bonus
The Committee believes that the annual bonus scheme for Financial Year 2024 was successful in driving the right behaviours across the business and as such
has determined that the annual bonus scheme for Financial Year 2025 will be the same and will be structured as follows:
The remaining 30% of the annual bonus plan will be allocated against the business scorecard as follows:
The non-financial elements will only be payable if a threshold level of financial performance is achieved. For Financial Year 2025 this will be unchanged
at 97.5% of Adjusted Operating Profit.
Performance Share Plan ('PSP') award Financial Year 2025 to Financial Year 2027
A PSP award is due to be made in respect of the 2025 to 2027 performance period.
Operating Cashflow (Million Pounds)
Sustainability - reduction in Scope 1, 2 and 3 emissions tCO2e
Additional remuneration disclosures
No payments 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.
Total shareholder return from September 2014 to September 2024 (rebased to 100)
This graph shows the value, by 28 September 2024, of 100 pounds invested in Mitchells and Butlers plc on 28 September 2014, compared with the value
of 100 pounds invested in the FTSE 250 and the FTSE All Share Travel and Leisure indices.
Year ended Phil Urban
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 remunerationblank
613,000
Pounds
770,000
Pounds
819,000
Pounds
1,684,000
Pounds
553,000
Pounds
627,000
Pounds
810,000
Pounds
1,573,000
Pounds
1,921,500
Pounds
Phil Urban: Annual bonus outcome (%
of max)
blank
blank
28%
39%
82%
blank
blank
33%
95%
100%
Phil Urban: LTIP vesting outcome (% of
max)
blank
blank
blank
blank
47.5%
blank
blank
blank
100%
100%
Alistair Darby: Single figure remuneration
878,000 Pounds
blank
blank
blank
blank
blank
blank
blank
blank
blank
Alistair Darby: Annual bonus outcome
(% of max)
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
Alistair Darby: LTIP vesting outcome (%
of max)
19.0%
blank
blank
blank
blank
blank
blank
blank
blank
blank
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 and 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.
Method
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
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 and 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.
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
201
795
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%
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
benefitsa
£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
108
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
Chief Executive
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
Salary
598,731 Pounds
20,402 Pounds
20,821 Pounds
21,148 Pounds
Total pay
1,919,044 Pounds
20,826 Pounds
20,833 Pounds
21,298 Pounds
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%).
Role
Name
Salary/Fees
2024
Bonus 2024
Benefits
2024
Salary/Fees
2023
Bonus 2023
Benefits
2023
Salary/Fees
2022
Bonus 2022
Benefits 2022
Salary/Fees
2021
Bonus 2021
Benefits 2021
Average
employee
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%
blank
16.7% 4.8%
blank
180.0% 0.0%
0.0%
-60.4%
0.0%
0.0%
-25.4%
Eddie Irwin
-0.9%
blank
blank
4.8%
blank
blank
0.0%
0.0%
0.0%
0.0%
0.0%
0%
Dave Coplin
-0.9%
blank
36.1% 4.8%
blank
967.9% 0.0%
0.0%
-93.2%
0.0%
0.0%
-74.0%
Josh Levy
-0.9%
blank
blank
4.8%
blank
blank
0.0%
0.0%
-100.0% 0.0%
0.0%
225.1%
Keith Browne
-0.9%
blank
blank
4.8%
blank
blank
0.0%
0.0%
0.0%
0.0%
0.0%
-59.2%
Jane Moriarty
-0.9%
blank
98.2% 8.7%
blank
197.3% 34.8%
0.0%
-54.3%
24.5%
0.0%
443.9%
Amanda Brown
-0.9%
blank
blank
354.0% blank
blank
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 Financial Year 2024 is due to Financial Year 2023 being a 53 week year.
Relative importance of spend on pay
Figures shown for wages and salaries consist of all earnings, including bonus. In Financial Year 2024, 3 Million Pounds (0.35%) was
paid to Executive and Non-Executive Directors (2023 2.9 Million pounds (0.36%)).
Wages and salaries
(From note 2.3 to the consolidated financial statements.)
Financial
Year
2024:
852
Million
Pounds
Financial
Year
2023:
795
Million
Pounds
Principal Taxes
Business Rates, Corporation Tax, Employers NI. There were no shareholder
dividends or share buybacks in Financial Year 2023.
Financial
Year
2024:
127
Million
Pounds
Financial Year
2023:
143
Million
Pounds
Pension deficit contributions
Financial
Year
2024:
1
Million
Pounds
Financial
Year
2023:
8
Million
Pounds
Debt service
Financial
Year
2024:
199
Million
Pounds
Financial
Year
2023:
201
Million
Pounds
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.
Non-Executive Director
Fees: Financial
Year
2024
Fees: Financial
Year
2023
Taxable
Benefits:
Financial
Year
2024
(See
note
A
in table
summary)
Taxable
Benefits:
Financial
Year
2023
(See
note
A
in table
summary)
Short-term
incentives:
Financial
Year
2024
Short-term
incentives:
Financial
Year
2023
Pension-related
benefits:
Financial
Year
2024
Pension-related
benefits:
Financial
Year
2023
Long-term
incentives:
Financial
Year
2024
Long-term
incentives:
Financial
Year
2023
Other:
Financial
Year
2024
Other:
Financial
Year
2023
Total remuneration:
Financial
Year
2024
Total remuneration:
Financial
Year
2023
Total fixed
pay:
Financial
Year
2024
Total fixed
pay:
Financial
Year
2023
Total variable
pay:
Financial
Year
2024
Total variable
pay:
Financial
Year
2023
Bob Ivell
295,000
Pounds
298,000
Pounds
2,000
Pounds
2,000
Pounds
blank blank blankblank blank blankblankblank297,000
Pounds
300,000
Pounds
297,000
Pounds
300,000
Pounds
blank blank
Eddie Irwin
55,000
Pounds
55,000
Pounds
blank blank blank blank blankblank blank blankblankblank55,000
Pounds
55,000
Pounds
55,000
Pounds
55,000
Pounds
blank blank
Josh Levy
55,000
Pounds
55,000
Pounds
500 Pounds
500 Pounds
blank blank blankblank blank blankblankblank55,500
Pounds
55,500
Pounds
55,500
Pounds
55,500
Pounds
blank blank
Dave Coplin
68,000
Pounds
69,000
Pounds
1,000
Pounds
500 Pounds
blank blank blankblank blank blankblankblank69,000
Pounds
69,500
Pounds
69,000
Pounds
69,500
Pounds
blank blank
Keith Browne
55,000
Pounds
55,000
Pounds
blank blank blank blank blankblank blank blankblankblank55,000
Pounds
55,000
Pounds
55,000
Pounds
55,000
Pounds
blank blank
Jane Moriarty
82,000
Pounds
83,000
Pounds
3,000
Pounds
1,000
Pounds
blank blank blankblank blank blankblankblank85,000
Pounds
84,000
Pounds
85,000
Pounds
84,000
Pounds
blank blank
Amanda Brown 68,000
Pounds
69,000
Pounds
1,000
Pounds
1,000
Pounds
blank blank blankblank blank blankblankblank69,000
Pounds
70,000
Pounds
69,000
Pounds
70,000
Pounds
blank blank
Sub-total Non-Executive
Directors
678,000
Pounds
684,000
Pounds
7,500
Pounds
5,000
Pounds
blank blank blankblank blank blankblankblank685,500
Pounds
689,000
Pounds
685,500
Pounds
689,000
Pounds
blank blank
Total Executive Directors
and Non-Executive
Directors
1,778,000
Pounds
1,751,000
Pounds
38,500
Pounds
36,000
Pounds
1,100,000
Pounds
1,014,000
Pounds
48,000
Pounds
74,000
Pounds
1,249,000
Pounds
716,000
Pounds
4,500
Pounds
5,000
Pounds
4,218,000
Pounds
3,596,000
Pounds
1,869,000
Pounds
1,866,000
Pounds
2,349,000
Pounds
1,730,000
Pounds
Non-Executive Directors: Implementation of remuneration policy in Financial Year 2025
The Chairs 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).
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
Gains made by the Executive Directors in relation to share options during Financial Year 2024 were nil.
Directors interests
Executive Directors are expected to hold Mitchells and Butlers shares in line with the shareholding guideline set out in the approved remuneration policy.
This requires the Chief Executive to accumulate Mitchells and 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 Urbans 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 Joness
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 Financial Year 2024 this was 299.7p (Financial Year
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.
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
conditionsa
Unvested
shares with
performance
conditions
Unvested shares without
performance conditionsb
Unvested options
without performance
conditionsc
Unvested options
with performance
conditions/underpinsd
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 Urbana
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.
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 Browna
4 July 2022
Bob Ivell
11 July 2013
Dave Coplina
29 February 2016
Josh Levy
20 July 2017
Jane Moriartya
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 £38,000b 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
110
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Governance
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):
Role
Director
Wholly-owned
shares
without
performance
conditions
in
2024 (See
note
A in
Table Summary)
Wholly-owned
shares
without
performance
conditions
in
2023 (See
note
A in
Table
Summary)
Unvested
shares
with
performance
conditions
in
2024
Unvested
shares
with
performance
conditions
in
2023
Unvested
shares
without
performance
conditions
in
2024 (See
note
B in
table summary)
Unvested
shares
without
performance
conditions
in
2023 (See
note
B in
table summary)
Unvested
options
without
performance
conditions
in
2024
(See
Note
C in
table summary)
Unvested
options
without
performance
conditions
in
2023
(See
Note
C
in table
summary)
Unvested options
with
performance
conditions/underpins
in
2024 (See
note D
in Table Summary)
Unvested
options
with
performance
conditions/underpins
in
2023 (See
note
D in
Table Summary)
Vested
but
unexercised
options
in
2024
Vested
but
unexercised
options
in
2023
Total shares/options
in
2024
Total shares/options
in
2023
Executive
Directors
Phil Urban
499,599 388,139 blank blank155,572 68,152 7,031 7,031 1,106,607 902,590 blankblank 1,768,809 1,365,912
Tim Jones
387,597 294,259 blank blank130,180 57,027 blank
blank 925,694
732,714 blankblank 1,443,471 1,084,000
Non-
Executive
Directors
Bob Ivell
17,222 17,222 blank blankblank
blank
blank
blank blank
blank
blankblank 17,222
17,222
Eddie Irwin
43,833 43,833 blank blankblank
blank
blank
blank blank
blank
blankblank 43,833
43,833
Dave Coplin
6,000
6,000
blank blankblank
blank
blank
blank blank
blank
blankblank 6,000
6,000
Josh Levy
blank
blank
blank blankblank
blank
blank
blank blank
blank
blankblank blank
blank
Keith Browne blank
blank
blank blankblank
blank
blank
blank blank
blank
blankblank blank
blank
Jane Moriarty blank
blank
blank blankblank
blank
blank
blank blank
blank
blankblank blank
blank
Amanda Brownblank
blank
blank blankblank
blank
blank
blank blank
blank
blankblank blank
blank
Total
Total
954,251 749,453 blank blank285,752 125,179 7,031 7,031 2,032,301 1,635,304 blankblank 3,279,335 2,516,967
Service contracts and Letters of Appointment
Executive Directors
Details of the service contracts of Executive Directors are set out below.
Phil Urban (See note A in table
summary)
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 Companys 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.
Mitchells and Butlers Remuneration Committee Committee terms of reference
Committee terms of reference
The Committees terms of reference were reviewed and updated in 2019 to take
account of the 2018 UK Corporate Governance Code.
Committee membership and operation
Committee members and their respective appointment dates are detailed
in the table below.
Amanda Brown (See note A in table
summary)
Dave Coplin (See note A in table
summary)
Jane Moriarty (See note A in table
summary)
Committee activity during the year
During the year the Committee met four times.
Date
Activity
October 2023
Remuneration Policy
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
Pounds and were charged on a time and materials basis ( Fees are shown net of VAT. 20%
VAT was paid on the advisers fees shown above.)
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 fora
%
Votes against
%
Votes withheldb
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
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
112
Annual Report and Accounts 2024 Mitchells & Butlers plc
Governance
Financial Statements
Mitchells & Butlers plc Annual Report and Accounts 2024
113
Other Information
Governance
Introduction
Strategic Report
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.
Voting Outcome
Votes for (See Note
A in Table
Summary)
Votes withheld
(See
Note B
in Table Summary)
Votes 'For' and 'Against' are expressed as a percentage of votes cast.
The Directors' Remuneration Report has been approved by the Board of Mitchells and Butlers plc.
Amanda Brown, Chair of the Remuneration
Committee, 26 November
2024
Details the financial performance of the Group
in Financial Year 2024 in comparison to
its performance in prior years.
In this section
Notes to the consolidated 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).
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
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Other Information
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Financial Statements
Financial Statements
Independent auditor's report to the members
of Mitchells and Butlers plc
1. Our opinion is unmodified
We have audited the financial statements of Mitchells and 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:
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.
Overview
Materiality: Group financial statements as a whole. 24 Million pounds (2023: 23
Million Pounds). 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
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.
Valuation of the freehold and
long leasehold restaurant
and pub estate
(4,260 million Pounds; 2023: 3,933
million Pounds)
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 Groups property estate is a major
source of estimation uncertainty.
Assessing valuation approach: We met with the Groups 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 managements involvement in the valuation process to assess whether
appropriate oversight had occurred.
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
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%)
84%
55%
10%
6%
94%
18%
27%
Group profits before tax
(2023: 94%)
88%
88%
7%
5%
95%
8%4%
Group revenue
Strategic Report
Governance
Other Information
Introduction
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Financial Statements
Financial Statements
Recoverability of parent
Company's investment
in subsidiaries
(1,966 million pounds; 2023: 1,866
million Pounds)
Low risk high value: The carrying amount
of the parent Companys investments
in subsidiaries represents 71%
(2023: 74%) of the Companys 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 continue to perform procedures over going concern. However, given the Companys 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.
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 pounds
(2023: 23 million pounds), 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 Groups
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
ﾣ18.7 million (2023: 18.7 Million Pounds), determined with reference to a benchmark
of parent Company total assets, of which it represents 0.68% (2023:
0.74%).
Performance materiality was set at 75% (2023: 75%) of materiality for the financial
statements as a whole, which equates to 18 million Pounds (2023: 17.2
Million Pounds) for the Group and ﾣ14 million (2023: 13.8 Million Pounds)
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 Pounds, to Group revenue and
cash and cash equivalents (2023: 16.4 million Pounds 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 Companys 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 Pounds (2023: 1.15 million Pounds), in addition to other
identified misstatements that warranted reporting on qualitative grounds.
Group total assets: 5,245 million
pounds (2023: 4,802
million pounds)
Group materiality: 24 million
pounds (2023: 23
million pounds)
Whole financial statements materiality:
24 Million Pounds
(2023: 23 Million Pounds)
Whole financial statements performance
materiality: 18 Million
Pounds (2023: 17.2 Million
Pounds)
Range of materiality at 5 components
21.6 Million Pounds(12
to 21.6 Million Pounds)
(2023: 11.5 Million Pounds
to 20.7 Million Pounds)
Misstatements reported to the audit
committee 1.2 Million Pounds
(2023: 1.15 Million Pounds)
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.
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.
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.
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.
Independent auditor’s report to the members of Mitchells & Butlers plc continued
Strategic Report
Governance
Other Information
Introduction
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Financial Statements
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 Groups business
and its financial statements.
The Group has set out its target to achieve zero greenhouse gas emissions
by 2040, for Scope 1, 2 and 3 emissions, zero operation waste
to landfill by 2030 and to reduce food waste by 50% by 2030 (from Financial
Year 2019 baselines).
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.
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 Companys 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").
Our conclusions based on this work:
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')
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:
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 Groups regulatory and legal correspondence and discussed
with the directors and other management the policies and procedures regarding compliance
with laws and regulations.
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.
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.
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
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
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
121
120
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
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.
Strategic report and directors' report
Based solely on our work on the other information:
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.
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.
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:
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 Companys 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.
Auditors 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
auditors 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.
10. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Companys 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 Companys members
those matters we are required to state to them in an auditors 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 Companys
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
2024
52 weeks
2023
53 weeks
Notes
Before
separately
disclosed
items
£m
Separately
disclosed
itemsa
£m
Total
£m
Before
separately
disclosed
items
£m
Separately
disclosed
itemsa
£m
Total
£m
Revenue
2.1, 2.3
2,610
–
2,610
2,503
–
2,503
Operating costs before depreciation,
amortisation and movements in the
valuation of the property portfolio
2.2, 2.3
(2,168)
–
(2,168)
(2,145)
–
(2,145)
Share in associates’ results
3.7
–
–
–
1
–
1
Net profit arising on property disposals
2.2, 2.3
–
2
2
–
3
3
EBITDAb before movements in the
valuation of the property portfolio
442
2
444
359
3
362
Depreciation, amortisation and movements
in the valuation of the property portfolio
2.2, 2.3
(130)
(14)
(144)
(133)
(131)
(264)
Operating profit/(loss)
312
(12)
300
226
(128)
98
Finance costs
4.2
(109)
–
(109)
(116)
–
(116)
Finance income
4.2
10
–
10
8
–
8
Net pensions finance charge
4.2, 4.5
(2)
–
(2)
(3)
–
(3)
Profit/(loss) before tax
211
(12)
199
115
(128)
(13)
Tax (charge)/credit
2.2, 2.4
(54)
4
(50)
(19)
28
9
Profit/(loss) for the period
157
(8)
149
96
(100)
(4)
Earnings/(loss) per ordinary share
– Basic
2.5
26.4p
25.0p
16.1p
(0.7p)
– Diluted
2.5
26.2p
24.8p
16.1p
(0.7p)
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
Group statement of comprehensive income
For the 52 weeks ended 28 September 2024
Notes
2024
52 weeks
£m
2023
53 weeks
£m
Profit/(loss) for the period
149
(4)
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain/(loss) on revaluation of the property portfolio
3.1
254
(76)
Remeasurement of pension liability
4.5
166
42
Tax relating to items not reclassified
2.4
(116)
5
304
(29)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
–
(1)
Cash flow hedges:
– (Losses) arising during the period
4.3
(34)
(9)
– Reclassification adjustments for items included in profit or loss
4.3
11
30
Tax relating to items that may be reclassified
2.4
6
(5)
(17)
15
Other comprehensive income/(expense) after tax
287
(14)
Total comprehensive income/(expense) for the period
436
(18)
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
Strategic Report
Governance
Other Information
Introduction
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122
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Group income statement
For the 52 weeks ended 28 September 2024
Before separately
disclosed
items
for 2024,
52 weeks
in Millions
of Pounds
Separately disclosed
items
for 2024,
52 weeks
in Millions
of Pounds
(See note
A in table
summary)
Total for 2024,
52 weeks
in Millions
of Pounds
Before separately
disclosed
items
for 2023,
52 weeks
in Millions
of Pounds
Separately disclosed
items
for 2023,
52 weeks
in Millions
of Pounds
(See
note A in
table summary)
Total for 2024,
52 weeks
in Millions
of Pounds
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
EBITDA before movements in the valuation
of the property portfolio (See note
B in table summary)
blank
blank
blank
blank
blank
blank
blank
blank
blank
Earnings/(loss) per ordinary share - Basic
blank
blank
Earnings/(loss) per ordinary share - Diluted
blank
blank
Group statement of comprehensive income
For the 52 weeks ended 28 September 2024
Group statement of comprehensive income
Type
Notes
2024, 52 weeks
in Millions
of Pounds
2023, 53 weeks
in Millions
of Pounds
Profit/(loss) for the period
blank
blank
149
(4)
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain/(loss)
on revaluation
of the
property portfolio
3.1
254
(76)
Remeasurement
of
pension liability
4.5
166
42
Tax relating to items
not reclassified
2.4
(116)
5
Subtotal
blank
304
(29)
Items that may be reclassified subsequently to profit or loss:
Exchange differences
on translation
of foreign
operations
blank
blank
(1)
Cash flow hedges:
(Losses)
arising during
the period
4.3
(34)
(9)
Cash flow hedges:
Reclassification
adjustments
for items
included in
profit or loss
4.3
11
30
Tax relating to items
that may be
reclassified
2.4
6
(5)
Subtotal
blank
(17)
15
Other comprehensive income/(expense) after tax
blank
blank
287
(14)
Total comprehensive income/(expense) for the period
blank
blank
436
(18)
Notes
2024
£m
2023
£m
Assets
Goodwill and other intangible assets
3.6
20
17
Property, plant and equipment
3.1
4,419
4,086
Right-of-use assets
3.2
307
327
Finance lease receivables
3.2
11
11
Other receivables
3.4
–
47
Pension surplus
4.5
164
–
Deferred tax asset
2.4
3
4
Derivative financial instruments
4.3
19
33
Total non-current assets
4,943
4,525
Inventories
3.4
27
25
Trade and other receivables
3.4
98
123
Finance lease receivables
3.2
1
1
Derivative financial instruments
4.3
–
2
Cash and cash equivalents
4.4
176
126
Total current assets
302
277
Total assets
5,245
4,802
Liabilities
Pension liabilities
4.5
(1)
(1)
Trade and other payables
3.4
(482)
(491)
Current tax liabilities
(1)
(2)
Borrowings
4.1
(143)
(144)
Lease liabilities
3.2
(33)
(33)
Derivative financial instruments
4.3
(2)
–
Total current liabilities
(662)
(671)
Pension liabilities
4.5
(24)
(21)
Other payables
3.4
(8)
–
Borrowings
4.1
(1,041)
(1,186)
Lease liabilities
3.2
(414)
(430)
Derivative financial instruments
4.3
(27)
(7)
Deferred tax liabilities
2.4
(491)
(348)
Provisions
3.5
(12)
(9)
Total non-current liabilities
(2,017)
(2,001)
Total liabilities
(2,679)
(2,672)
Net assets
2,566
2,130
Equity
Called up share capital
4.7
51
51
Share premium account
4.7
357
357
Capital redemption reserve
4.7
3
3
Revaluation reserve
4.7
1,143
951
Own shares held
4.7
(9)
(5)
Hedging reserve
4.7
(21)
(4)
Translation reserve
4.7
14
14
Retained earnings
1,028
763
Total equity
2,566
2,130
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
The consolidated 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
Group balance sheet
28 September 2024
Group statement of changes in equity
For the 52 weeks ended 28 September 2024
Called
up share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Revaluation
reserve
£m
Own
shares
held
£m
Hedging
reserve
£m
Translation
reserve
£m
Retained
earnings
£m
Total
equity
£m
At 24 September 2022
51
357
3
1,009
(5)
(20)
15
733
2,143
Loss for the period
–
–
–
–
–
–
–
(4)
(4)
Other comprehensive (expense)/income
–
–
–
(58)
–
16
(1)
29
(14)
Total comprehensive (expense)/income
–
–
–
(58)
–
16
(1)
25
(18)
Credit in respect of share-based payments
–
–
–
–
–
–
–
5
5
At 30 September 2023
51
357
3
951
(5)
(4)
14
763
2,130
Profit for the period
–
–
–
–
–
–
–
149
149
Other comprehensive income/(expense)
–
–
–
192
–
(17)
–
112
287
Total comprehensive income/(expense)
–
–
–
192
–
(17)
–
261
436
Purchase of shares
–
–
–
–
(7)
–
–
–
(7)
Release of shares
–
–
–
–
3
–
–
(3)
–
Credit in respect of share-based payments
–
–
–
–
–
–
–
6
6
Tax on share-based payment
–
–
–
–
–
–
–
1
1
At 28 September 2024
51
357
3
1,143
(9)
(21)
14
1,028
2,566
The notes on pages 127 to 179 form an integral part of these consolidated financial statements.
Strategic Report
Governance
Other Information
Introduction
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125
124
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Group balance sheet
28 September 2024
Type
Category
2024 in Millions
of Pounds
2023 in Millions
of Pounds
Assets
Goodwill and other intangible assets
blank
blank
blank
blank
blank
blank
Liabilities
Pension liabilities
blank
blank
blank
blank
blank
blank
blank
Equity
Called up share capital
blank
blank
Tim Jones, Chief Financial
Officer
Group statement of changes in equity
For the 52 weeks ended 28 September 2024
Changes in equity
Called up share
capital
in Millions
of Pounds
Share premium
account
in
Millions
of
Pounds
Capital redemption
reserve
in
Millions
of
Pounds
Revaluation
reserve
in Millions
of Pounds
Own shares
held
in Millions
of
Pounds
Hedging
reserve
in
Millions
of
Pounds
Translation
reserve
in
Millions
of
Pounds
Retained earnings
in
Millions of
Pounds
Total equity
in
Millions
of
Pounds
At 24 September 2022
51
357
3
1,009
(5)
(20)
15
733
2,143
Loss for the period
blank
blank
blank
blank
blank
blank
blank
(4)
(4)
Other comprehensive (expense)/income blank
blank
blank
(58)
blank
16
(1)
29
(14)
Total comprehensive (expense)/income
blank
blank
blank
(58)
blank
16
(1)
25
(18)
Credit in respect of share-based payments blank
blank
blank
blank
blank
blank
blank
5
5
At 30 September 2023
51
357
3
951
(5)
(4)
14
763
2,130
Profit for the period
blank
blank
blank
blank
blank
blank
blank
149
149
Other comprehensive income/(expense) blank
blank
blank
192
blank
(17)
blank
112
287
Total comprehensive income/(expense)
blank
blank
blank
192
blank
(17)
blank
261
436
Purchase of shares
blank
blank
blank
blank
(7)
blank
blank
blank
(7)
Release of shares
blank
blank
blank
blank
3
blank
blank
(3)
blank
Credit in respect of share-based payments blank
blank
blank
blank
blank
blank
blank
6
6
Tax on share-based payment
blank
blank
blank
blank
blank
blank
blank
1
1
At 28 September 2024
51
357
3
1,143
(9)
(21)
14
1,028
2,566
Notes to the consolidated financial statements
Section 1 – Basis of preparation
General information
Mitchells & Butlers plc (the Company) is a public limited company limited
by shares and is registered in England and Wales. The Company’s shares
are listed on the London Stock Exchange. The address of the Company’s
registered office is shown on page 192.
The principal activities of the Company and its subsidiaries (the Group)
and the nature of the Group’s operations are set out in the Strategic
Report on pages 18 to 58.
The Group is required to prepare its consolidated financial statements
in accordance with UK-adopted International Financial Reporting
Standards (IFRSs) and in accordance with the Companies Act 2006.
The Group’s accounting reference date is 30 September. The Group
draws up its consolidated financial statements to the Saturday directly
before or following the accounting reference date, as permitted
by section 390 (3) of the Companies Act 2006. The period ended
28 September 2024 includes 52 trading weeks and the comparative
period ended 30 September 2023 includes 53 trading weeks.
The consolidated financial statements have been prepared on the
historical cost basis as modified by the revaluation of freehold and long
leasehold properties, pension obligations and financial instruments.
The Group’s accounting policies have been applied consistently.
Going concern
The Group’s business activities, together with the factors likely to affect
its future development, performance and position are set out in the
Strategic Report on pages 18 to 58. The financial position of the Group,
its cash flows, liquidity position and borrowing facilities are also
described within the Financial Review on pages 56 to 58.
Note 4.3 to the consolidated financial statements includes the Group’s
objectives, policies and processes for managing capital; its financial risk
management objectives; details of its financial instruments and hedging
activities; and, its exposures to credit and liquidity risks. As highlighted
in note 4.1 to the consolidated financial statements, the Group’s financing
is based on securitised debt and unsecured borrowing facilities.
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 cash flows throughout the going concern period, being
12 months from the date of signing of these financial statements.
The Group’s primary source of borrowings is through nine tranches of
fully amortising loan notes with a gross debt value of just under £1.2bn
as at the end of the year. These are secured against the majority of the
Group’s property and future income streams. The principal repayment
period varies by class of note with maturity dates ranging from 2028 to
2036. Within this 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 28 September 2024 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.
The Group also has a committed unsecured credit facility of £200m,
with a negative pledge in favour of participating banks and an expiry
date in July 2026. At the balance sheet date there were no drawings
under this facility. This facility has two main financial covenants, based
on the performance of the unsecured estate: 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), both tested on a half-yearly basis (for the prior
four quarters).
In the year ahead the main uncertainties facing the Group are considered
to be the maintenance of sales growth in the face of pressure on consumer
spending power, and the rate of cost inflation. The outlook for these is
uncertain and will depend on a number of factors including consumer
confidence, global political developments, supply chain disruptions and
government policies.
The Directors have reviewed the financing arrangements against a base
case forward trading forecast in which they have considered the Group’s
current financial position. This forecast assumes mid single digit growth
in sales across the year. Cost inflation is assumed to remain at broadly
similar levels to the previous financial period with the marked exception
of energy costs, which are assumed to be stable with no further deflation
from recent historic peaks, and labour costs, which include provision
for increased levels of Employers National Insurance contributions from
April 2025. As a result, an overall net increase of approximately five
percent across the cost base of the business of approximately £2bn
is expected. Under this base case the Group is able to stay within
securitisation and committed facility financial covenants and maintains
sufficient liquidity.
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 mitigation activity is taken
including lower capital expenditure on site remodel activity and a flex
down of labour and site costs in line with reduced sales. In this scenario
sales are assumed to remain marginally in growth but at three percent
below the base case forecast. Unmitigated cost inflation is also higher
in the areas of food and energy. In this downside scenario the Group is
again able to stay within securitisation and committed facility financial
covenants, whilst maintaining sufficient liquidity.
Furthermore, the Directors have considered a reverse stress test analysis,
to review the headroom below which trading could fall beyond the
downside scenario before the earlier of financial covenants becoming
breached, or available liquidity becoming insufficient. This analysis
indicates that on consistent cost assumptions, sales would be able to fall by
approximately 5% beyond the downside case throughout the assessment
period before financial covenants were breached, when tested at Q4 FY
2025 being the last full testing period within the 12 month going concern
assessment period. In this scenario the Group would still have sufficient
available liquidity.
After due consideration of these factors, the Directors therefore believe
that it remains appropriate to prepare the financial statements on a going
concern basis.
A review of longer-term viability is provided on page 53 which assesses
the Group’s ability to continue in operation and to meet its liabilities as
they fall due over a longer, three year period.
Notes
2024
52 weeks
£m
2023
53 weeks
£m
Cash flow from operations
Operating profit
300
98
Add back/(deduct):
Movement in the valuation of the property portfolio
2.2
14
131
Net profit arising on property disposals
2.2
(2)
(3)
Loss on disposal of fixtures, fittings and equipment
–
2
Depreciation of property, plant and equipment
2.3
92
93
Amortisation of intangibles
2.3
4
4
Depreciation of right-of-use assets
2.3
34
36
Cost charged in respect of share-based payments
4.6
7
5
Administrative pension costs
4.5
5
5
Share of associates results
3.7
–
(1)
Settlement of pre existing lease contracts
2.2
–
3
Fair value gain on associate
2.2
–
(5)
Operating cash flow before movements in working capital and
additional pension contributions
454
368
Increase in inventories
(1)
(2)
Decrease/(increase) in trade and other receivables
44
(42)
Increase in trade and other payables
8
44
Decrease in provisions
(1)
(1)
Additional pension contributions
4.5
(1)
(8)
Cash flow from operations
503
359
Interest paymentsa
(96)
(95)
Interest receipts/(payments) on interest rate swapsa
3
(7)
Interest receipts on cross currency swapa
7
7
Interest payments on cross currency swapa
(5)
(4)
Other interest paid – lease liabilities
4.4
(17)
(16)
Borrowing facility fees paid
–
(2)
Interest received
9
9
Tax paid
(18)
(3)
Net cash from operating activities
386
248
Investing activities
Acquisition of 3Sixty Restaurants Limited
5.1
–
(12)
Acquisition of Pesto Restaurants Ltd
5.1
(2)
–
Purchases of property, plant and equipment
(152)
(154)
Purchases of intangible assets
(2)
(3)
Proceeds from sale of property, plant and equipment
1
3
Finance lease principal repayments received
1
1
Net cash used in investing activities
(154)
(165)
Financing activities
Purchase of own shares
4.7
(7)
–
Repayment of principal in respect of securitised debtb
4.4
(128)
(121)
Principal receipts on currency swapb
4.4
21
21
Principal payments on currency swapb
4.4
(16)
(16)
Cash payments for the principal portion of lease liabilities
4.4
(41)
(53)
Repayment of other borrowings
(1)
–
Short-term financing of employee advances
2
–
Net cash used in financing activities
(170)
(169)
Net increase/(decrease) in cash and cash equivalents
62
(86)
Cash and cash equivalents at the beginning of the period
4.4
103
190
Foreign exchange movements
(1)
(1)
Cash and cash equivalents at the end of the period
4.4
164
103
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
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
127
126
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Group cash flow statement
For the 52 weeks ended 28 September 2024
2024, 52 weeks
in Millions
of Pounds
2023, 53 weeks
in Millions
of Pounds
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
Interest payments (See Note A in Table Summary)
blank
Interest receipts/(payments) on interest rate swaps (See Note A in Table Summary)
blank
Interest receipts on cross currency swap (See Note A in Table Summary)
blank
Interest payments on cross currency swap (See Note A in Table Summary)
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
Repayment of principal in respect of securitised debt (See Note B in Table Summary)
Principal receipts on currency swap (See Note B in Table Summary)
Principal payments on currency swap (See Note B in Table Summary)
blank
blank
blank
blank
blank
blank
blank
General information
Mitchells and Butlers plc (the Company) is a public limited company limited by
shares and is registered in England and Wales. The Companys shares are
listed on the London Stock Exchange. The address of the Companys registered
office is shown on page 192.
Going concern
The Groups business activities, together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report on pages 18 to 58. The
financial position of the Group, its cash flows, liquidity position and borrowing facilities are also
described within the Financial Review on pages 56 to 58.
The Group also has a committed unsecured credit facility of 200 million pounds,
with a negative pledge in favour of participating banks and an expiry
date in July 2026. At the balance sheet date there were no drawings under
this facility. This facility has two main financial covenants, based on the
performance of the unsecured estate: 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), both tested on a half-yearly basis (for the prior four quarters).
Furthermore, the Directors have considered a reverse stress test analysis, to review the headroom
below which trading could fall beyond the downside scenario before the earlier of financial
covenants becoming breached, or available liquidity becoming insufficient. This analysis
indicates that on consistent cost assumptions, sales would be able to fall by approximately
5% beyond the downside case throughout the assessment period before financial
covenants were breached, when tested at Q4 Financial Year 2025 being the last full testing
period within the 12 month going concern assessment period. In this scenario the Group would
still have sufficient available liquidity.
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 the functional
currency at the relevant rates of exchange ruling at the balance sheet
date. Foreign exchange differences arising on translation are recognised
in the Group income statement. Non-monetary assets and liabilities
are measured at cost using the exchange rate on the date of the initial
transaction.
The consolidated financial statements are presented in pounds sterling
(rounded to the nearest million), being the functional currency of the
primary economic environment in which the parent and most
subsidiaries operate.
On consolidation, the assets and liabilities of the Group’s overseas
operations are translated into sterling at the relevant rates of exchange
ruling at the balance sheet date. The results of overseas operations
are translated into sterling at average rates of exchange for the period.
Exchange differences arising from the translation of the results and the
retranslation of opening net assets denominated in foreign currencies
are taken directly to the Group’s translation reserve. When an overseas
operation is sold, such exchange differences are recognised in the Group
income statement as part of the gain or loss on sale.
The results of overseas operations have been translated into sterling at
the weighted average euro rate of exchange for the period of £1 = €1.15
(2023 £1 = €1.16), where this is a reasonable approximation to the rate
at the dates of the transactions. Euro and US dollar denominated assets
and liabilities have been translated at the relevant rate of exchange at the
balance sheet date of £1 = €1.20 (2023 £1 = €1.15) and £1 = $1.34
(2023 £1 = $1.22) respectively.
New and amended IFRS Standards that are effective for the
current period
The International Accounting Standards Board (IASB) and International
Financial Reporting Interpretations Committee (IFRIC) have issued the
following standards and interpretations which have been adopted by the
Group in these consolidated financial statements for the first time with
no material impact.
Accounting standard
Effective date
Amendments to IAS 1 and IFRS
Practice Statement 2 (Disclosure
of Accounting Policies)
1 January 2023
Amendments to IAS 8 (Definition
of Accounting Estimates)
1 January 2023
Amendments to IAS 12 (Deferred
Tax related to Assets and Liabilities
arising from a Single Transaction)
1 January 2023
IFRS 17 Insurance Contracts
1 January 2023
Section 1 – Basis of preparation continued
Notes to the consolidated financial statements continued
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of Mitchells & Butlers plc (‘the Company’) and entities
controlled by the Company (its subsidiaries).
Control is achieved when the Company:
• has the power over the investee;
• is exposed, or has rights, to variable return from its involvement
with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts
and circumstances indicate that there are changes to one or more of the
three elements of control listed above.
When the Company has less than a majority of voting rights of an
investee, it considers that it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Company considers all relevant
facts and circumstances in assessing whether or not the Company’s
voting rights in an investee are sufficient to give it power, including:
• the size of the Company’s holding of voting rights relative to the size
and dispersion of holdings of the other vote holders;
• potential voting rights held by the Company, other vote holders
or parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the
Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made,
including voting patterns at the previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control
over the subsidiary and ceases when the Company loses control of the
subsidiary. Specifically, the results of the subsidiaries acquired or disposed
of during the period are included in the Group income statement from
the date the Company gains control until the date when the Company
ceases to control the subsidiary.
The financial statements of the subsidiaries are prepared for the same
financial reporting period as the Company, with the exception of Pesto
Restaurants Ltd which is prepared to 29 September 2024 (see note 5.3).
Intercompany transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated on consolidation.
New and revised IFRS Standards in issue but not
yet effective
The IASB, IFRIC and the International Sustainability Standards Board
(ISSB) have issued the following standards and interpretations which
could impact the Group, with an effective date for financial periods
beginning on or after the dates disclosed below:
Accounting standard
Effective date
Amendments to IFRS 16 Leases
(Lease Liability in a Sale and
Leaseback)
1 January 2024
Amendments to IAS 1
Presentation of Financial
Statements (Classification of
liabilities as Current or Non-
Current and Non-current
Liabilities with Covenants)
1 January 2024
Amendments to IAS 7 Statement
of Cash Flows and IFRS 7 Financial
Instruments (Disclosures –
Supplier Finance Arrangements)
1 January 2024
IFRS S1 General Requirements for
Disclosure of Sustainability-
related Financial Information
1 January 2024
IFRS S2 Climate-related
Disclosures
1 January 2024
Amendments to IAS 21 The
Effects of Changes in Foreign
Exchange Rates (Lack of
Exchangeability)
1 January 2025
Amendments to IFRS 9 Financial
Instruments and IFRS 7 Financial
Instruments: Disclosures
(Amendments to the Classification
and Measurement of Financial
Instruments)
1 January 2026
Annual Improvements to IFRS
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
1 January 2026
IFRS 18 Presentation and
Disclosure in Financial Statements
1 January 2027
The Directors do not expect that the adoption of the standards listed
above will have a material impact on the consolidated financial statements
in future periods. With respect to IFRS 18, the Group is still assessing the
potential impact of this standard on presentation and disclosures.
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 evaluated 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.
Judgements and estimates for the period remain largely unchanged
from the prior period, with the additional area of judgement around the
recognition of pension surplus (see note 4.5).
Significant accounting estimates:
The significant accounting estimate with a significant risk of a material
change to the carrying value of assets and liabilities within the next year
in terms of IAS 1 Presentation of Financial Statements, is:
• Fair value of freehold and long leasehold properties – see note 3.1
Other areas of judgement are described in each section listed below:
• Determination of items that are separately disclosed – see note 2.2
• Impairment review of short leasehold properties and right-of-use
assets – see note 3.3
• Recognition of pension surplus – see note 4.5
Other sources of estimation uncertainty are described in:
• Impairment review of short leasehold properties and right-of-use
assets – see note 3.3
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
129
128
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Basis of consolidation
The consolidated financial statements incorporate the financial statements
of Mitchells and Butlers plc ('the Company') and entities controlled
by the Company (its subsidiaries).
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 the functional currency at the relevant rates
of exchange ruling at the balance sheet date. Foreign exchange differences
arising on translation are recognised in the Group income statement.
Non-monetary assets and liabilities are measured at cost using the exchange
rate on the date of the initial transaction.
The results of overseas operations have been translated into sterling at the weighted average euro
rate of exchange for the period of ﾣ1 = ﾬ1.15 (2023 ﾣ1 = ﾬ1.16), where this is a reasonable
approximation to the rate at the dates of the transactions. Euro and US dollar denominated
assets and liabilities have been translated at the relevant rate of exchange at the balance
sheet date of ﾣ1 = ﾬ1.20 (2023 ﾣ1 = ﾬ1.15) and ﾣ1 = $1.34 (2023 ﾣ1 = $1.22) respectively.
New and amended IFRS Standards that are effective for the current period
The International Accounting Standards Board (IASB) and International Financial
Reporting Interpretations Committee (IFRIC) have issued the following
standards and interpretations which have been adopted by the Group
in these consolidated financial statements for the first time with no material
impact.
New and revised IFRS Standards in issue but not yet effective
The IASB, IFRIC and the International Sustainability Standards Board (ISSB) have issued the
following standards and interpretations which could impact the Group, with an effective date
for financial periods beginning on or after the dates disclosed below:
Amendments to IAS 7 Statement
of Cash Flows and IFRS
7 Financial Instruments (Disclosures
- Supplier Finance Arrangements)
Annual Improvements to IFRS Accounting
Standards - Amendments
to: IFRS 1 First-time
Adoption of International
Financial Reporting Standards;
IFRS 7 Financial Instruments:
Disclosures and its
accompanying Guidance on
implementing IFRS 7; IFRS 9 Financial
Instruments; IFRS 10 Consolidated
Financial Statements;
and IAS 7 Statement
of Cash flows
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.
Fair value of freehold and long leasehold properties see note 3.1
Other sources of estimation uncertainty are described in:
Impairment review of short leasehold properties and right-of-use assets -
see note 3.3
Section 2 – Results for the period
2.1 Segmental analysis
Accounting policies
Operating segments
IFRS 8 Operating Segments requires operating segments to be based on the Group’s internal reporting to its Chief Operating Decision Maker
(CODM). The CODM is regarded as the Chief Executive together with other Board members. The Group trades in one business segment (that of
operating pubs and restaurants) and the Group’s brands meet the aggregation criteria set out in Paragraph 12 of IFRS 8. Economic indicators assessed
in determining that the aggregated operating segments share similar economic characteristics include: expected future financial performance;
operating and competitive risks; and return on invested capital. As such, the Group reports the business as one reportable business segment.
The CODM uses EBITDA and operating profit before interest and separately disclosed items as the key measures of the Group’s results on an
aggregated basis.
Geographical segments
Substantially all of the Group’s business is conducted in the United Kingdom. In presenting information by geographical segment, segment
revenue and non-current assets are based on the geographical location of customers and assets.
Geographical segments
UK
Germany
Total
2024
52 weeks
£m
2023
53 weeks
£m
2024
52 weeks
£m
2023
53 weeks
£m
2024
52 weeks
£m
2023
53 weeks
£m
Revenue – sales to third parties
2,493
2,387
117
116
2,610
2,503
Segment non-current assetsa
4,706
4,442
51
46
4,757
4,488
a. Includes balances relating to intangibles, property, plant and equipment, right-of-use assets, finance lease receivables and non-current other receivables.
2.2 Separately disclosed items
Accounting policy
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 profit measures are presented excluding separately disclosed items as
we believe this provides management, investors and other stakeholders 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.
Separately disclosed items are those which are separately identified by virtue of their size or incidence.
Accounting judgements
Judgement is used to determine those items which should be separately disclosed to allow an understanding of the adjusted trading performance
of the Group. This judgement includes assessment of whether an item is of sufficient size or of a nature that is not consistent with normal trading
activities.
Separately disclosed items are identified as follows:
• A refund in relation to the settlement of a long-standing claim with HMRC regarding gaming duty was separately disclosed in prior periods
due to its size on initial recognition.
• Profit/(loss) arising on property disposals – property disposals are disclosed separately as they are not considered to be part of adjusted trade
performance and there is volatility in the size of the profit/(loss) in each accounting period.
• Movement in the valuation of the property portfolio – this is disclosed separately, due to the size and volatility of the movement in property
valuation each period, which can be partly driven by movements in the property market and discount rate where impairment reviews are
completed. This movement is also not considered to be part of the adjusted trade performance of the Group and would prevent comparability
between periods of the Group’s trading performance if not separately disclosed.
• Costs associated with acquisitions – all costs directly associated with acquisition of subsidiaries, including in the prior period fair value
adjustment to the associate carrying value and settlement of pre-existing lease contracts, within the Group are reported separately due to the
nature of the transaction as they are not considered to be part of the adjusted trade performance of the Group.
The items identified in the current period are as follows:
Notes
2024
52 weeks
£m
2023
53 weeks
£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.
2.3 Revenue and operating costs
Accounting policies
Revenue recognition
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.
Revenue – food and drink
The majority of revenue comprises food and drinks sold in the Group’s outlets. Revenue is recognised when control of the goods has transferred,
being at the point the customer purchases the goods at the outlet or on ordering through a delivery partner. Payment of the transaction price is
due immediately at the point the customer makes a purchase at the outlet, or on agreed terms where purchases are made through third-party
delivery partners. Revenue excludes sales-based taxes, and is net of any coupons and discounts.
Revenue – services
Revenue for services mainly represents income from gaming machines, hotel accommodation and rent receivable from unlicensed and leased
operations. Revenue for gaming machines and hotel accommodation is recognised at the point the service is provided and excludes sales-based
taxes and discounts.
Rental income is received from operating leases where the Group acts as lessor for a number of unlicensed and leased operations. Income from
these leases is recognised on a straight-line basis over the term of the lease.
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
131
130
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Accounting policies
Operating segments: IFRS 8 Operating Segments requires operating segments to be based on the Groups internal reporting to its Chief Operating Decision
Maker (CODM). The CODM is regarded as the Chief Executive together with other Board members. The Group trades in one business segment (that
of operating pubs and restaurants) and the Groups brands meet the aggregation criteria set out in Paragraph 12 of IFRS 8. Economic indicators assessed
in determining that the aggregated operating segments share similar economic characteristics include: expected future financial performance; operating
and competitive risks; and return on invested capital. As such, the Group reports the business as one reportable business segment.
Geographical segments: Substantially all of the Group's business is conducted in the United Kingdom. In presenting information by geographical segment,
segment revenue and non-current assets are based on the geographical location of customers and assets.
Type
UK 2024, 52 Weeks
in Millions
of Pounds
UK 2023, 53
Weeks in
Millions of
Pounds
Germany 2024,
52 Weeks
in Millions
of Pounds
Germany 2023,
53 Weeks
in Millions
of Pounds
Total 2024, 52
Weeks in Millions
of Pounds
Total 2023,
53 Weeks
in Millions
of Pounds
Revenue sales to third parties
2,493
2,387
117
116
2,610
2,503
Segment non-current assets (See Note A in Table Summary)
4,706
4,442
51
46
4,757
4,488
Accounting policy: 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 profit measures are presented excluding separately disclosed items
as we believe this provides management, investors and other stakeholders with useful additional information about the Groups performance and
supports a more effective comparison of the Groups 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 Groups longer-term
strategic plans.
Accounting judgements: Judgement is used to determine those items which should be separately disclosed to allow an understanding
of the adjusted trading performance of the Group. This judgement includes assessment of whether an item is of sufficient
size or of a nature that is not consistent with normal trading activities.
Revenue recognition: Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with
a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control
of a product or service to a customer.
The items identified in the current period are as follows:
Separately disclosed items
Notes
2024, 52 Weeks
in Millions
of Pounds
2023, 53 Weeks
in Millions
of Pounds
Gaming machine settlement
a
blank
(1)
Fair value adjustment to investment in 3Sixty Restaurants Limited
b
blank
5
Settlement of pre-existing lease contracts on acquisition of 3Sixty Restaurants Limited
c
blank
(3)
Costs associated with the acquisition of 3Sixty Restaurants Limited
d
blank
(1)
Total separately disclosed items recognised within operating costs
blank
blank
blank
Net profit arising on property disposals
blank
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)
Movement in the valuation of the property portfolio: Net impairment of short leasehold and unlicensed
properties
f
blank
(6)
Movement in the valuation of the property portfolio: Net impairment of right-of-use assets
g
(17)
(14)
Movement in the valuation of the property portfolio: Net impairment of computer software
h
(1)
blank
Movement in the valuation of the property portfolio: Net impairment of goodwill
i
blank
(1)
Net movement in the valuation of the property portfolio
blank
(14)
(131)
Total separately disclosed items before tax
blank
(12)
(128)
Tax credit relating to above items
blank
4
28
Total separately disclosed items after tax
blank
(8)
(100)
Accounting policies
Revenue - food and drink: The majority of revenue comprises food and drinks sold in the Groups outlets. Revenue is recognised when control of the goods
has transferred, being at the point the customer purchases the goods at the outlet or on ordering through a delivery partner. Payment of the transaction
price is due immediately at the point the customer makes a purchase at the outlet, or on agreed terms where purchases are made through third-party
delivery partners. Revenue excludes sales-based taxes, and is net of any coupons and discounts.
Revenue services: Revenue for services mainly represents income from gaming machines, hotel accommodation and rent receivable
from unlicensed and leased operations. Revenue for gaming machines and hotel accommodation is recognised at the
point the service is provided and excludes sales-based taxes and discounts.
2.3 Revenue and operating costs continued
Accounting policies continued
Operating profit
Operating profit is stated after charging separately disclosed items but before investment income and finance costs.
Supplier incentives
Supplier incentives and rebates are recognised within operating costs as they are earned. The accrued value at the reporting date is included
in other receivables.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and
that the grants will be received.
Government grants are recognised in the income statement on a systematic basis over the periods in which the Group recognises as expenses
the related operating costs for which the grants are intended to compensate.
Apprenticeship incentives
The Group is entitled to claim £1,000 for each apprentice employed, where they are aged 16 to 18, or under 25 and meet certain other criteria.
Government grants
The impact of grants received on the income statement is as follows:
Government grant scheme
Income statement line impact
2024
52 weeks
£m
2023
53 weeks
£m
Apprenticeship incentives
Revenue – other
–
1
Total Government grants received
–
1
Revenue
Revenue is analysed as follows:
2024
52 weeks
£m
2023
53 weeks
£m
Food
1,385
1,323
Drink
1,132
1,092
Services
93
87
Other – Apprenticeship incentives
–
1
2,610
2,503
Revenue from services includes rent receivable from unlicensed properties and leased operations of £9m (2023 £9m).
Food and drink revenue includes £18m in respect of gift card redemptions, which was recorded within deferred income at the prior period end.
Section 2 – Results for the period continued
Operating costs
Operating costs are analysed as follows:
2024
52 weeks
£m
2023
53 weeks
£m
Raw materials and food and drink consumables recognised as an expensea
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 costsb
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
a. Supplier incentives are included as a reduction to the raw materials and consumables expense. These are not disclosed separately as the value is immaterial.
b. Property operating lease costs include service charge, insurance and turnover rents.
Employee costs
2024
52 weeks
£m
2023
53 weeks
£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
The four-weekly average number of employees including part-time employees was 49,249 retail employees (2023 48,003) and 1,206 support
employees (2023 1,147).
Information regarding key management personnel is included in note 5.2. Detailed information regarding Directors’ emoluments, pensions,
long-term incentive scheme entitlements and their interests in share options is given in the Report on Directors’ remuneration in the information
labelled as audited by KPMG on pages 92 to 112.
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
133
132
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Operating profit: Operating profit is stated after charging separately disclosed items but
before investment income and finance costs.
Supplier incentives: Supplier incentives and rebates are recognised within operating costs as they are earned.
The accrued value at the reporting date is included in other receivables.
Government grants: Government grants are not recognised until there is reasonable assurance that the Group
will comply with the conditions attaching to them and that the grants will be received.
Apprenticeship incentives: The Group is entitled to claim ﾣ1,000 for each apprentice employed, where they are aged 16 to 18,
or under 25 and meet certain other criteria.
Government grants: The impact of grants received on the income
statement is as follows:
2024, 52 weeks in Millions of
Pounds
2023, 53 weeks
in Millions
of Pounds
Revenue - other
blank
blank
blank
Revenue: Revenue is analysed as follows:
Revenue Type
2024, 52 Weeks in Millions of Pounds
2023, 53 Weeks
in Millions
of
Pounds
blank
Total
Revenue from services includes rent receivable from unlicensed properties and leased operations of 9 million pounds (2023 9 million pounds).
Operating costs: Operating costs are analysed
as follows:
Type
2024, 52 Weeks in Millions of Pounds
2023, 53 Weeks
in Millions
of
Pounds
Raw materials and food and drink consumables recognised as an expense (Supplier
incentives are included as a reduction to the raw materials and consumables
expense. These are not disclosed separately as the value is immaterial.)
Property operating lease costs (Property operating lease costs include service
charge, insurance and turnover rents.)
Employee costs
Employee Cost Table
2024, 52 Weeks in Millions of Pounds
2023, 53 Weeks
in Millions
of
Pounds
2.3 Revenue and operating costs continued
Auditor remuneration
2024
52 weeks
£m
2023
53 weeks
£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 feesa
1.0
0.9
Total fees
1.0
0.9
a. Auditor’s remuneration of £0.9m (2023 £0.8m) was paid in the UK and £0.1m (2023 £0.1m) was paid in Germany.
Non-audit fees payable to the Group’s auditor in the current period totalled £10k (2023 £6k).
2.4 Taxation
Accounting policies
The income tax (charge)/credit represents both the income tax payable, based on profits/(losses) for the period, and deferred tax and is calculated
using tax rates enacted or substantively enacted at the balance sheet date. Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense which are not taxable. Income tax is recognised in the income statement except when it relates
to items that are charged or credited in other comprehensive income or directly in equity, in which case the income tax is also charged or credited
in other comprehensive income or directly in equity.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profits and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the
Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to
the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they
are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realised based on tax
laws and rates that have been substantively enacted at the balance sheet date. The amount of deferred tax recognised is based on the expected
manner of realisation or settlement of the carrying amount of assets and liabilities.
Section 2 – Results for the period continued
Taxation – Group income statement
2024
52 weeks
£m
2023
53 weeks
£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
The standard rate of corporation tax applied to the reported profit/(loss) is 25.0% (2023 22.0%).
The tax charge (2023 credit) in the Group income statement for the period is in line with (2023 higher than) the standard rate of corporation tax
in the UK. The differences are reconciled below:
2024
52 weeks
£m
2023
53 weeks
£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
Taxation for other jurisdictions is calculated at the rates prevailing in those jurisdictions.
2024
52 weeks
£m
2023
53 weeks
£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
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
135
134
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Auditor remuneration
Fees
2024, 52 weeks
in millions
of pounds
2023, 53 weeks
in millions
of pounds
Fees payable to the Groups auditor for the audit of the consolidated financial statements
Fees payable to the Groups auditor for the audit of the consolidated financial statements audit of the Companys
subsidiaries financial statements
Total audit fees (See note A in table summary)
Accounting policies: The income tax (charge)/credit represents both the income tax payable, based on profits/(losses) for the period, and deferred tax and
is calculated using tax rates enacted or substantively enacted at the balance sheet date. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense which are not taxable. Income tax is recognised in the income statement except when it
relates to items that are charged or credited in other comprehensive income or directly in equity, in which case the income tax is also charged or credited
in other comprehensive income or directly in equity.
Deferred tax: Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profits and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised.
Taxation - Group income statement
Tax Type
2024, 52 Weeks
in Millions
of Pounds
2023, 53 Weeks
in Millions
of Pounds
Current tax: Corporation tax
Deferred tax: Origination and reversal of temporary differences
Deferred tax: Effect of changes in UK tax rate
blank
Deferred tax: Amounts under-provided in prior periods
(1)
blank
Further analysed as tax relating to: Profit before separately disclosed items
Further analysed as tax relating to: Separately disclosed items
The tax charge (2023 credit) in the Group income statement for the period is in line with (2023 higher than) the standard rate of corporation tax in the UK. The differences
are reconciled below:
Type
2024, 52 weeks
in Millions
of Pounds
2023, 53 weeks
in Millions
of Pounds
blank
blank
blank
2024, 52 weeks in Millions of Pounds
2023, 53 weeks
in millions
of
pounds
blank
Tax losses - UK
blank
Tax losses - Interest Restriction
blank
blank
blank
2.4 Taxation continued
Taxation – other comprehensive income
2024
52 weeks
£m
2023
53 weeks
£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)
–
Tax relating to items recognised directly in equity
2024
52 weeks
£m
2023
53 weeks
£m
Deferred tax:
– Tax credit related to share-based payments
1
–
Taxation – Group balance sheet
The deferred tax assets and liabilities recognised in the Group balance sheet are shown below:
2024
£m
2023
£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)
At 28 September 2024, the Group has netted off deferred tax assets of £49m (2023 £68m) with deferred tax liabilities where there is a legally
enforceable right to settle on a net basis. Deferred tax assets and liabilities have been offset and disclosed in the Group balance sheet as follows:
2024
£m
2023
£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
Unrecognised tax allowances
At the balance sheet date the Group had unrecognised tax allowances of £81m in respect of unclaimed capital allowances (2023 £90m) available
for offset against future profits.
A deferred tax asset has not been recognised on tax allowances with a value of £20m (2023 £22m) because it is not certain that future taxable profits
will be available in the company where these tax allowances arose against which the Group can utilise these benefits. These tax credits can be carried
forward indefinitely.
Factors which may affect future tax charges
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 will be effective for the Group from the 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 will continue to work on evaluating the final impact of both
the calculations and the reporting requirements through FY 2025.
For the year to 28 September 2024, the Group has applied the IAS 12 mandatory exception to recognising and disclosing information about deferred
tax assets and liabilities related to Pillar Two income taxes.
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
52 weeks
£m
2023
53 weeks
£m
Profit/(loss) for the period
149
(4)
Separately disclosed items, net of tax
8
100
Adjusted profit for the perioda
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
52 weeks
million
2023
53 weeks
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
52 weeks
pence
2023
53 weeks
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 sharea
26.4p
16.1p
Diluted earnings/(loss) per share
Diluted earnings/(loss) per share
24.8 p
(0.7) p
Adjusted diluted earnings per sharea
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.
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
137
136
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Taxation other comprehensive income
Deferred tax:
2024, 52 weeks in Millions of Pounds
2023, 53 weeks
in Millions
of
Pounds
Items that will not be reclassified subsequently to profit or loss: Unrealised (gains)/losses
due to revaluations - revaluation reserve
Items that will not be reclassified subsequently to profit or loss: Unrealised gains due to
revaluations - retained earnings
blank
Items that will not be reclassified subsequently to profit or loss: Remeasurement of pension
liability
Subtotal
blank
Deferred tax:
2024, 52 weeks
in millions
of pounds
2023, 53 weeks
in millions
of pounds
Tax credit related to share-based payments
1
blank
Taxation Group balance sheet: The deferred tax assets and liabilities recognised in the Group balance
sheet are shown below:
Assets
and
Liabilities
Type
2024 in Millions
of Pounds
2023 in Millions
of Pounds
Deferred
tax
assets:
Retirement benefit obligation (note 4.5)
blank
Tax losses - UK
Tax losses - Interest restriction
Deferred
tax
liabilities:
Accelerated capital allowances Rolled over and held over gains
blank
Total
At 28 September 2024, the Group has netted off deferred tax assets of 49 Million Pounds (2023 68 Million Pounds) with deferred tax liabilities where there is a legally enforceable right to settle
on a net basis. Deferred tax assets and liabilities have been offset and disclosed in the Group balance sheet as follows:
Type
2024 in Millions of Pounds
2023 in Millions
of
Pounds
Unrecognised tax allowances: At the balance sheet date the Group had unrecognised tax allowances of 81 Million Pounds in respect of unclaimed capital
allowances (2023 90 Million Pounds) available for offset against future profits.
A deferred tax asset has not been recognised on tax allowances with a value of 20 Million Pounds (2023 22 Million Pounds) because it is not certain that future
taxable profits will be available in the company where these tax allowances arose against which the Group can utilise these benefits. These tax credits
can be carried forward indefinitely.
Factors which may affect future tax charges: 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 will be effective for the Group from the 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 will continue to work on evaluating the
final impact of both the calculations and the reporting requirements through Financial Year 2025.
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.
Type
2024, 52 weeks
in Millions
of Pounds
2023, 53 weeks
in Millions
of Pounds
149
8
Adjusted profit for the period (See Note A)
157
Type
2024, 52 weeks in Millions
2023, 53 weeks
in Millions
Effect of dilutive potential ordinary shares: Contingently issuable shares
blank
Based/Diluted
earnings
Type
2024, 52 weeks in pence
2023, 53 weeks
in pence
Basic
earnings/(loss)
per
share
Basic earnings/(loss) per share
Adjusted basic earnings per share (See Note A in Table Summary)
Diluted
earnings/(loss)
per
share
Diluted earnings/(loss) per share
Adjusted diluted earnings per share (See Note A in Table Summary)
Section 3 – Operating assets and liabilities
3.1 Property, plant and equipment
Accounting policies
Property, plant and equipment
The majority of the Group’s freehold and long leasehold licensed land and buildings, and the associated landlord’s fixtures, fittings and equipment
(i.e. fixed fittings) are revalued annually and are therefore held at fair value less depreciation. Tenant’s fixtures and fittings (i.e. loose fixtures)
within freehold and long leasehold properties, are held at cost less depreciation and impairment.
Short leasehold buildings (leases with an unexpired lease term of less than 50 years), unlicensed land and buildings and associated fixtures,
fittings and equipment are held at cost less depreciation and impairment.
Land and buildings include leasehold improvements on long and short leases. All land and buildings are disclosed as a single class of asset within
the property, plant and equipment table, as we do not consider the short leasehold and unlicensed buildings to be material for separate disclosure.
Non-current assets held for sale are held at their carrying value or their fair value less costs to sell where this is lower.
Depreciation
Depreciation is charged to the income statement on a straight-line basis to write off the cost less residual value over the estimated useful life
of an asset and commences when an asset is ready for its intended use. Expected useful lives and residual values are reviewed each period
and adjusted if appropriate. No adjustments have been made in the period.
Freehold land is not depreciated.
Freehold and long leasehold buildings are depreciated so that the difference between their carrying value and estimated residual value is written
off over 50 years from the date of acquisition. The residual value of freehold and long leasehold buildings is reassessed each period and is
estimated to be equal to the fair value determined in the annual valuation and therefore no depreciation charge is recognised.
Short leasehold buildings, and associated fixtures and fittings, are depreciated over the shorter of the estimated useful life and the unexpired
term of the lease.
Fixtures, fittings and equipment have the following estimated useful lives:
Information technology equipment
3 to 7 years
Fixtures and fittings
3 to 20 years
At the point of transfer to non-current assets held for sale, depreciation ceases. Should an asset be subsequently reclassified to property, plant
and equipment, the depreciation charge is calculated to reflect the cumulative charge had the asset not been reclassified.
Disposals
Profits and losses on disposal of property, plant and equipment are calculated as the difference between the net sales proceeds and the carrying
amount of the asset at the date of disposal.
Revaluation
The revaluation, performed at 28 September 2024, is determined via annual third-party inspection of 20% of the sites with the aim that all sites
are individually valued approximately every five years. The valuation utilises estimates of fair maintainable trade (FMT) and valuation multiples.
The revaluation determined by the annual inspection was carried out in accordance with the RICS Valuation – Global Standards 2022 which
incorporate the International Valuation Standards and the RICS Valuation – Professional Standards UK (the ‘Red Book’) assuming each asset
is sold as a fully operational trading entity.
Properties are valued as fully operational entities, to include fixtures and fittings but excluding stock, tenant’s fixtures and fittings and personal
goodwill.
The 80% of the freehold and long leasehold estate which is not subject to a third-party valuation in the period is instead revalued internally
by management. The Group’s external valuer provides advice to management in relation to their internal valuation. This valuation is performed
using estimates of FMT, together with the same valuation multiples as those applied by the external valuer. Sites impacted by expansionary capital
investment in the preceding twelve months are reviewed for impairment only, based on estimated annualised post-investment FMT against the
carrying value of the asset. Where the value of land and buildings derived purely from a multiple applied to the FMT misrepresents the underlying
asset value, a spot valuation is applied.
Surpluses which arise from the revaluation exercise are included within other comprehensive income (in the revaluation reserve) unless they are
reversing a revaluation deficit which has been recognised in the income statement previously; in which case an amount equal to a maximum of
that recognised in the income statement previously is recognised in the income statement. Where the revaluation exercise gives rise to a deficit,
this is reflected directly within the income statement, unless it is reversing a previous revaluation surplus against the same asset; in which case
an amount equal to the maximum of the revaluation surplus is recognised within other comprehensive income (in the revaluation reserve).
Impairment
Short leaseholds, unlicensed properties and fixtures and fittings are reviewed on an outlet basis for impairment if events or changes in
circumstances indicate that the carrying amount may not be recoverable. Further details of the impairment policy are provided in the impairment
note 3.3.
Accounting judgements
Revaluation of freehold and long leasehold properties
The revaluation methodology is determined, with advice from CBRE, independent chartered surveyors, and incorporates management
judgement where appropriate. The application of a valuation multiple to the FMT of each site is considered the most appropriate method for
the Group to determine the fair value of freehold and long leasehold licensed land and buildings.
In the current and prior period, judgement has been applied to establish the basis of FMT that a willing third-party buyer would assume. The
estimation of FMT is derived from the individual profit and loss accounts of pubs and restaurants and is inclusive of the centrally recorded trading
margins earned by the Group but exclusive of certain head office costs. This represents the Group’s best view of the value that would be attributed
by other reasonably efficient operators. In the current period FMT reflects the reported site performance. In the prior period the prevailing reported
profits were negatively impacted by high and sustained cost inflation, notably in food and energy price increases driven by the Ukraine conflict.
However the inflationary pressures were not expected to fully impact on site valuations and as such, FMT was determined to include an
adjustment to reported profit margins.
Where sites have been impacted by expansionary capital investment in the preceding twelve months, the FMT has been determined by estimating
annualised post-investment operating profit with reference to post-investment forecasts.
For the purposes of the valuation, and in order to group together properties of a similar nature, groupings by brand are applied for which standard
multiples have been established through third-party inspections of 20% of the freehold and long leasehold licensed property estate. Judgements
are applied in assessing multiples on the basis of market evidence of transaction prices and nature of the overall offer within the local market, with
specific consideration given to geographical location, ancillary revenue such as accommodation sales from bedrooms and lease terms for long
leasehold sites.
Further judgement is required when a spot valuation is applied where the property value derived purely from a multiple applied to the FMT
misrepresents the underlying asset value with consideration given to the level of trade and location characteristics.
Significant accounting estimates
Revaluation of freehold and long leasehold properties
The application of the valuation methodology requires two significant estimates: the estimation of valuation multiples, which are determined via
third-party inspections; and an estimate of FMT.
In the prior period adjustments were made to pub and restaurant trading margins to reflect the margin impacts of cost inflation which were
expected to persist into the level of FMT used by third-party, reasonably efficient operators in arriving at a transaction price. The impact of inflation
across drink and food, labour, energy and other pub operating costs compared to pre Covid was assessed and adjusted individually. In aggregate
approximately 2.5% of the total margin reduction reported in the prior period against pre Covid trade was expected to recover in the short to
medium term and was included in estimated FMT. In the current period, costs have stabilised such that the Group’s external valuer now considers
that the current level of reported site profitability is representative of the FMT that a third-party, reasonably efficient operator would include in
arriving at a transaction price.
The estimation of valuation multiples is derived from the valuers knowledge of market evidence of transaction prices for similar properties. In the
current period the multiples adopted are mostly in line with the prior period other than a slight easing for some parts of the premium end of the market.
There is considered to be a significant risk that an adjustment to either of these assumptions could lead to a material change in the property
valuation within the next year.
A sensitivity analysis of changes in valuation multiples and FMT, in relation to the properties to which these estimates apply, is provided on
page 148. The carrying value of properties to which these estimates apply is £4,260m (2023 £3,933m).
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
139
138
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Accounting policies
Property, plant and equipment: The majority of the Groups freehold and long leasehold licensed land and buildings, and the associated landlords fixtures,
fittings and equipment (i.e. fixed fittings) are revalued annually and are therefore held at fair value less depreciation. Tenants fixtures and fittings
(i.e. loose fixtures) within freehold and long leasehold properties, are held at cost less depreciation and impairment.
Depreciation: Depreciation is charged to the income statement on a straight-line basis to write off the cost less residual value over the estimated useful
life of an asset and commences when an asset is ready for its intended use. Expected useful lives and residual values are reviewed each period
and adjusted if appropriate. No adjustments have been made in the period.
Information technology equipment: 3 to 7 years.
Fixtures and fittings: 3 to 20 years
Disposals: Profits and losses on disposal of property, plant and equipment are calculated as the difference between the net sales
proceeds and the carrying amount of the asset at the date of disposal.
Revaluation: The revaluation, performed at 28 September 2024, is determined via annual third-party inspection of 20% of the sites with the aim that all
sites are individually valued approximately every five years. The valuation utilises estimates of fair maintainable trade (FMT) and valuation multiples.
The revaluation determined by the annual inspection was carried out in accordance with the RICS Valuation Global Standards 2022 which
incorporate the International Valuation Standards and the RICS Valuation Professional Standards UK (the Red Book) assuming each asset
is sold as a fully operational trading entity.
Impairment: Short leaseholds, unlicensed properties and fixtures and fittings are reviewed on an outlet basis for impairment if events
or changes in circumstances indicate that the carrying amount may not be recoverable. Further details of the impairment
policy are provided in the impairment note 3.3.
Accounting judgements
Revaluation of freehold and long leasehold properties: The revaluation methodology is determined, with advice from CBRE, independent chartered surveyors,
and incorporates management judgement where appropriate. The application of a valuation multiple to the FMT of each site is considered
the most appropriate method for the Group to determine the fair value of freehold and long leasehold licensed land and buildings.
Significant accounting estimates
Revaluation of freehold and long leasehold properties: The application of the valuation methodology requires two significant estimates: the estimation of valuation
multiples, which are determined via third-party inspections; and an estimate of FMT.
A sensitivity analysis of changes in valuation multiples and FMT, in relation to the properties to which these estimates apply, is provided on page 148. The carrying value of properties
to which these estimates apply is 4,260 Million Pounds (2023 3,933 Million Pounds).
3.1 Property, plant and equipment continued
Property, plant and equipment
Property, plant and equipment can be analysed as follows:
Land and
buildings
£m
Fixtures, fittings
and equipment
£m
Total
£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
Disposalsa
(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
Disposalsa
(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
Disposalsa
(5)
(92)
(97)
Exchange differences
–
(1)
(1)
At 30 September 2023
80
475
555
Provided during the period
4
88
92
Disposalsa
(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
a. Includes assets which are fully depreciated and have been removed from the fixed asset register.
Land and buildings include leasehold improvements on long and short leases with a net book value of £314m (2023 £294m).
Certain assets with a net book value of £44m (2023 £39m) owned by the Group are subject to a fixed charge in respect of liabilities held
by the Mitchells & Butlers Executive Top-Up Scheme (MABETUS).
Included within property, plant and equipment are assets with a net book value of £3,697m (2023 £3,446m), which are pledged as security
for the securitisation debt and over which there are certain restrictions on title. Further details of the securitisation are provided in note 4.1.
Cost at 28 September 2024 includes £14m (2023 £16m) of assets in the course of construction.
Revaluation of freehold and long leasehold properties
The fair value has been determined by estimations of FMT and brand valuation multiples. In the current period, FMT is reflective of reported profits.
Consideration has been given to location, quality of the pub restaurant and recent market transactions in the sector in assessing property multiples
and multiples have been reduced in some areas to reflect a softening of demand at the top end of the market. In the prior period adjustments were
made to reported site profits in assessing FMT, to reflect trading margin impacts of cost inflation pressures present at the time and considered by
prospective third-party market participants to not be reflective of passing transaction prices. The cost inflation pressures were most notably on food,
labour, energy and other pub operating costs.
Sensitivity analysis
Changes in the FMT, or the multiple could materially impact the valuation of the freehold and long leasehold properties, and as such they are both
considered to be significant estimates in the current period.
FMT
In the current period, FMT has increased by 6% over the prior period’s adjusted FMT, excluding the sites with investment in the current period
which are only assessed for impairment. Given trading has now normalised following the disruption caused by the Covid pandemic in 2020, and there
is a more stable inflationary environment, a return to pre Covid FMT movements is considered to be within range of reasonably possible outcomes.
Over the three years reported prior to Covid the average movement in the FMT of the revalued estate was 1%. Assuming multiples remain stable,
it is estimated that a 1% reduction in the FMT would generate an approximate £37m reduction in the valuation. A 1% increase in the FMT is estimated
to generate an approximate £36m increase in the valuation. The sensitivity does not apply to sites with spot valuations as these valuations are
independent of reported operating profits. Any change to the spot valuations would not be material.
Multiples
Valuation multiples are determined at an individual brand level. Over the last three financial periods, the weighted average brand multiple has moved
by an average of 0.1, which is considered to be within the range of reasonably possible outcomes for future movements in multiples. It is estimated
that a 0.1 reduction in the multiple would generate an approximate £42m reduction in the valuation. A 0.1 increase to the multiple is estimated to
generate an approximate £41m increase in the valuation.
Impairment review
Short leasehold and unlicensed properties (comprising land, buildings, fixtures, fittings and equipment) which are not revalued to fair market value,
are reviewed for impairment as described in the impairment note 3.3. A net impairment of £nil (2023 £6m) has been recognised against short
leasehold and unlicensed properties in the period.
Revaluation and impairment recognised
Current period valuations have been incorporated into the consolidated financial statements and the resulting revaluation adjustments have been
taken to the revaluation reserve or Group income statement as appropriate.
The impact of the revaluations/impairments described above is as follows:
2024
52 weeks
£m
2023
53 weeks
£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)
The valuation techniques are consistent with the principles in IFRS 13 and use significant unobservable inputs such that the fair value measurement
of each property within the portfolio has been classified as Level 3 in the fair value hierarchy.
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
141
140
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Cost/Valuation,
Accumulated
depreciation
or
Net
book
value
Type
Land and buildings in Millions Pounds
Fixtures, fittings
and equipment
in Millions
Pounds
Total in Millions
Pounds
Cost
or
valuation
At 24 September 2022
Disposals (See note A in Table Summary)
blank
blank
blank
Disposals (See note A in Table Summary)
blank
blank
At 28 September 2024
Accumulated
depreciation
At 24 September 2022
Disposal (See note A in Table Summary)
blank
Disposals (See note A in Table Summary)
blank
Net
book
value
Land and buildings include leasehold improvements on long and short leases with a net book value of 314 Million Pounds (2023 294 Million Pounds).
Certain assets with a net book value of 44 Million Pounds (2023 39 Million Pounds) owned by the Group are subject to a fixed charge in respect
of liabilities held by the Mitchells and Butlers Executive Top-Up Scheme (MABETUS).
Included within property, plant and equipment are assets with a net book value of 3,697 Million Pounds (2023 3,446 Million Pounds), which are pledged as security for the securitisation
debt and over which there are certain restrictions on title. Further details of the securitisation are provided in note 4.1.
Cost at 28 September 2024 includes 14 Million Pounds (2023 16 Million Pounds) of assets in the course of construction.
Revaluation of freehold and long leasehold properties: The fair value has been determined by estimations of FMT and brand valuation multiples. In the current
period, FMT is reflective of reported profits. Consideration has been given to location, quality of the pub restaurant and recent market transactions in
the sector in assessing property multiples and multiples have been reduced in some areas to reflect a softening of demand at the top end of the market. In
the prior period adjustments were made to reported site profits in assessing FMT, to reflect trading margin impacts of cost inflation pressures present at the
time and considered by prospective third-party market participants to not be reflective of passing transaction prices. The cost inflation pressures were most
notably on food, labour, energy and other pub operating costs.
Sensitivity analysis: Changes in the FMT, or the multiple could materially impact the valuation of the freehold and long leasehold properties, and as such
they are both considered to be significant estimates in the current period.
FMT: In the current period, FMT has increased by 6% over the prior periods adjusted FMT, excluding the sites with investment in the current period which are
only assessed for impairment. Given trading has now normalised following the disruption caused by the Covid pandemic in 2020, and there is a more stable
inflationary environment, a return to pre Covid FMT movements is considered to be within range of reasonably possible outcomes. Over the three years
reported prior to Covid the average movement in the FMT of the revalued estate was 1%. Assuming multiples remain stable, it is estimated that a 1% reduction
in the FMT would generate an approximate ﾣ37m reduction in the valuation. A 1% increase in the FMT is estimated to generate an approximate ﾣ36m
increase in the valuation. The sensitivity does not apply to sites with spot valuations as these valuations are independent of reported operating profits. Any
change to the spot valuations would not be material.
Multiples: Valuation multiples are determined at an individual brand level. Over the last three financial periods, the weighted average brand multiple has moved
by an average of 0.1, which is considered to be within the range of reasonably possible outcomes for future movements in multiples. It is estimated that
a 0.1 reduction in the multiple would generate an approximate 42 Million Pounds reduction in the valuation. A 0.1 increase to the multiple is estimated to
generate an approximate 41 Million Pounds increase in the valuation.
Impairment review: Short leasehold and unlicensed properties (comprising land, buildings, fixtures, fittings and equipment) which are not revalued to fair market
value, are reviewed for impairment as described in the impairment note 3.3. A net impairment of ﾣnil (2023 6 Million Pounds) has been recognised against
short leasehold and unlicensed properties in the period.
Revaluation and impairment recognised: Current period valuations have been incorporated into the consolidated financial statements and the resulting revaluation
adjustments have been taken to the revaluation reserve or Group income statement as appropriate.
The impact of the revaluations/impairments described above is as follows:
Category
Type
2024, 52 weeks in millions of pounds
2023, 53 weeks
in millions
of
pounds
Group
income
statement
Revaluation deficit charged as an impairment
blank
Group
statement
of
other
comprehensive
income
Unrealised revaluation surplus
Net
increase/(decrease)
in
property,
plant
and
equipment
Net increase/(decrease) in property, plant and equipment
3.1 Property, plant and equipment continued
The number of pubs included in the revaluation and the resulting valuation of these properties is reconciled to the total value of property, plant and
equipment below.
Number of pubs
Land and
buildings
£m
Fixtures,
fittings and
equipment
£m
Net book
valuea
£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
Number of
pubs
Land and
buildings
£m
Fixtures,
fittings and
equipment
£m
Net book
valuea
£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
a. The carrying value of freehold and long leasehold properties based on their historical cost is £2,581m and £180m respectively (2023 £2,503m and £171m).
The tables below show, for revalued properties, the number of pubs that have been valued within each fair maintainable trade and multiple banding:
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
Movements in valuation multiples between financial periods are the result of changes in property market conditions. The average weighted multiple
is 8.7 (2023 8.7).
Capital commitments
2024
£m
2023
£m
Contracts placed for expenditure on property, plant and equipment not provided for in the consolidated
financial statements
18
12
3.2 Leases
Leases – Group as lessee
Accounting policies
The Group assesses whether a contract is or contains a lease, at inception of the contract.
The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except
for short-term leases (defined as leases with a lease term of twelve months or less), leases containing variable lease payment terms that are linked
to the revenue generated from leased pubs and leases of low value assets (such as tablets and personal computers, small items of office furniture
and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the future lease payments unpaid at the lease commencement date, discounted
by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate. Lease payments
included in the measurement of the lease liability comprise:
• Fixed lease payments (including in substance fixed payments), less any lease incentives receivable; and
• Lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
• The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise
of a break option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which
case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments
change is due to a change in a floating interest rate, in which case a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured
based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date
of the modification.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, adjusted for any advance payments made
at or before lease commencement, less any lease incentives received and any initial direct costs (including lease premiums).
Whenever the Group incurs an obligation to restore the underlying asset to the condition required by the terms
and conditions of the lease, a dilapidations provision is recognised and measured under IAS 37 Provisions, Contingent Liabilities and Contingent
Assets. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset.
Right-of-use assets are depreciated over the remaining committed lease term on a straight-line basis. Right-of-use assets are tested annually
for impairment in accordance with IAS 36 Impairment of Assets.
Right-of-use assets are subsequently remeasured for any changes in lease term and future committed rental payments.
For short-term leases (lease term of twelve months or less), and leases of low-value assets (such as personal computers and office furniture),
the Group recognises a lease expense on a straight-line basis, directly in the income statement, as permitted by IFRS 16.
Impairment of right-of-use assets
Right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets, as described in the policy in the impairment
note 3.3.
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
143
142
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
The number of pubs included in the revaluation and the resulting valuation of these properties is
reconciled to the total value of property, plant and equipment below.
Number of pubs Land and buildings
in Millions
of Pounds
Fixtures, fittings
and equipment
In
Millions of
Pounds
Net book value
In Millions
of Pounds
(See
Note A in
Table Summary)
blank
blank
blank
blank
blank
Land and buildings
in Millions
of Pounds
Fixtures, fittings
and equipment
in
Millions of
Pounds
Net book value
in Millions
of
Pounds
(See
Note
A in Table
Summary)
blank
blank
blank
blank
blank
Date
Band
Over 10 times (Valuation
multiple
applied
to fair maintainable
trade)
9 to 10 times (Valuation
multiple
applied
to fair
maintainable
trade)
8 to 9 times
(Valuation
multiple
applied
to fair
maintainable
trade)
7 to 8 times
(Valuation
multiple
applied
to fair
maintainable
trade)
Under 7 times (Valuation
multiple
applied
to fair maintainable
trade)
Total (Valuation
multiple
applied
to fair
maintainable
trade)
28
September
2024
Number of pubs in each fair maintainable trade banding:
less than 200 Thousand Pounds per annum
Number of pubs in each fair maintainable trade banding:
from 200 Thousand pounds to 360 thousand
pounds per annum
Number of pubs in each fair maintainable trade banding:
more than 360 thousand pounds per annum
Total
30
September
2023
Number of pubs in each fair maintainable trade banding:
less than 200 Thousand Pounds per annum
83
42
174
179
17
495
Number of pubs in each fair maintainable trade banding:
from 200 Thousand pounds to 360 thousand
pounds per annum
Number of pubs in each fair maintainable trade banding:
more than 360 thousand pounds per annum
Total
Capital commitment
2024 in Millions of
Pounds
2023 in Millions
of
Pounds
Contracts placed for expenditure on property, plant and equipment not provided for in the consolidated
financial statements
3.2 Leases
Leases Group as lessee
Accounting policies: The Group assesses whether a contract is or contains a lease,
at inception of the contract.
Impairment of right-of-use assets: Right-of-use assets are tested for impairment in accordance with IAS
36 Impairment of Assets, as described in the policy in the impairment note 3.3.
3.2 Leases continued
Right-of-use assets
Right-of-use assets can be analysed as follows:
Land and
buildings
£m
Cars
£m
Total
£m
Cost
At 24 September 2022
568
6
574
Acquired through business combinations (note 5.1)
6
–
6
Additionsa
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
Additionsa
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
a. Additions to right-of-use assets include new leases, increases in dilapidation provisions and lease extensions or rent reviews relating to existing leases.
Some of the property leases in which the Group is lessee contain variable lease payment terms that are linked to the revenue generated from the
leased pubs. Variable payment terms are used in contracts to link rental payments to pub cash flows and reduce fixed costs. The total value of variable
lease payments charged to the income statement in the current period is £3m (2023 £2m).
Impairment review of right-of-use assets
Right-of-use assets are reviewed for impairment by comparing site recoverable amounts to their carrying values. Impairment is considered at a
cash-generating unit level. A net impairment of £17m (2023 £14m) has been recognised against right-of-use assets in the period. Details of the
impairment review at a cash-generating unit level are disclosed in note 3.3.
Lease liabilities
A maturity analysis of the undiscounted future lease payments used to calculate the lease liabilities is shown below.
2024
£m
2023
£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
Leases – Group as lessor
Accounting policy
The Group enters into lease agreements as a lessor with respect to some of its properties. The properties are operated as either licensed
or unlicensed businesses by the tenants.
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. When
the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two separate contracts. The sub-lease is classified as
a finance or operating lease by reference to the right-of-use asset arising from the head lease.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis
over the lease term.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. Finance
lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding
in respect of the leases.
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
145
144
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Right-of-use assets: can be analysed as follows:
Cost,
Accumulated
depreciation
and
impairment
and
Net
book
value
Type
Land and buildings in
Millions of Pounds
Cars in Millions
of Pounds
Total in Millions
of Pounds
Cost
At 24 September 2022
blank
Additions (See Note A in Table Summary)
blank
blank
blank
Additions (See Note A in Table Summary)
blank
Accumulated
depreciation
and
impairment
At 24 September 2022
blank
blank
blank
blank
Net
book
value
At 28 September 2024
Some of the property leases in which the Group is lessee contain variable lease payment terms that are linked to the revenue generated from the leased pubs.
Variable payment terms are used in contracts to link rental payments to pub cash flows and reduce fixed costs. The total value of variable lease payments
charged to the income statement in the current period is 3 Million Pounds (2023 2 Million Pounds).
Impairment review of right-of-use assets: Right-of-use assets are reviewed for impairment by comparing site recoverable amounts to their carrying values.
Impairment is considered at a cash-generating unit level. A net impairment of 17 Million Pounds (2023 14 Million Pounds) has been recognised
against right-of-use assets in the period. Details of the impairment review at a cash-generating unit level are disclosed in note 3.3.
Lease liabilities: A maturity analysis of the undiscounted future lease payments used to calculate the lease liabilities is shown
below.
2024 in Millions of
Pounds
2023 in Millions
of
Pounds
Analysed as: Current lease liabilities - principal amounts due within twelve months
Analysed as: Non-current lease liabilities - principal amounts due after twelve months
Total
Leases - Group as lessor
Accounting policy: The Group enters into lease agreements as a lessor with respect to some of its properties. The properties
are operated as either licensed or unlicensed businesses by the tenants.
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
£m
2023
£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
£m
2023
£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).
3.3 Impairment
Accounting policies
Impairment – Property, plant and equipment, right-of-use assets, computer software and goodwill
As described in the property, plant and equipment policy (note 3.1), the lease accounting policy (note 3.2) and the goodwill policy (note 3.6),
impairment reviews are considered at a cash-generating unit level, with this being an individual outlet.
The carrying value of assets for an individual outlet comprise the property, plant and equipment value, the associated right-of-use asset and
any attributable goodwill, together with an allocation of central asset values (property, plant and equipment, right-of-use asset and computer
software). At each balance sheet date, the Group assesses whether there is any indication that the carrying value of assets for individual outlets
may be impaired. If any such impairment indicator exists then an impairment loss is recognised whenever the carrying value of the outlet
exceeds its recoverable amount, which is determined as the higher of the value in use, or fair value less costs to sell for each outlet. Any resulting
impairment relates to sites with poor trading performance, where the output of the value in use calculations are insufficient to justify their current
net book value. Changes in outlet earnings or cash flows, the discount rate applied to those cash flows, or the estimate of fair value less costs
of disposal could give rise to an additional impairment loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
but only so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset in prior periods. A reversal of an impairment loss is recognised in the income statement. An impairment reversal
is only recognised where there is a change in circumstances or favourable events since the last impairment test impacting estimates used to
determine recoverable amounts, not where it results from the passage of time.
Accounting judgements
Impairment review of cash-generating units – property, plant and equipment, right-of-use assets, computer software and goodwill
For the individual outlet level impairment review, judgement has been applied to determine the most appropriate site level profit and cash flow
forecasts based on the Group forecast for FY 2025 to FY 2027 that was in place at the balance sheet date.
Management apply judgement when allocating overhead costs to site cash flows, with an overhead allocation being made only for those
costs that can be directly attributable to a site on a consistent basis. Judgement is applied in the allocation of corporate level assets to individual
cash-generating units, based on relative profitability.
Other sources of estimation uncertainty
Impairment review of cash-generating units – property, plant and equipment, right-of-use assets, computer software and goodwill
The impairment review requires two key sources of estimation uncertainty in calculating the value in use: the estimation of forecast cash flows
for each site and the selection of an appropriate discount rate. The discount rate is applied consistently to each cash-generating unit.
A sensitivity of changes in forecast cash flows and the discount rate is provided on page 148. The carrying value of assets to which these estimates
apply is £442m (2023 £452m).
Impairment review of cash-generating units, comprising property, plant and equipment, right-of-use assets, computer
software and goodwill
Recoverable amount is determined as the higher of the value in use, or fair value less costs to sell for each outlet.
Value in use calculations use forecast trading performance pre-tax cash flows, for years 1 to 3. These include steady increases to revenue and costs.
In the short to medium term, over the three year forecast period, no allowances have been made for any potential impact activity related to climate
change, other than continued maintenance and infrastructure spend on existing sustainability projects, as the impacts of this on future cash flows
or capital expenditure cannot yet be reasonably estimated or allocated to cash-generating units.
The forecast cash flows are discounted by applying a pre-tax discount rate of 11.00% (2023 11.00%) and a long-term growth rate of 2.0% from year 4
(2023 2.0%). The long-term growth rate is applied to the net cash flows and is based on up-to-date economic data points.
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
147
146
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
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 in Millions
of Pounds
2023 in Millions
of Pounds
Net investment in the leases is analysed as: Current finance lease receivables - amounts due within 12 months
Net investment in the leases is analysed as: Non-current finance lease receivables amounts due after 12
months
Total
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:
Type
2024 in Millions of
Pounds
2023 in Millions
of
Pounds
Total
3.3 Impairment
Accounting policies
Impairment Property, plant and equipment, right-of-use assets, computer software and goodwill: As described in the property, plant and equipment policy
(note 3.1), the lease accounting policy (note 3.2) and the goodwill policy (note 3.6), impairment reviews are considered at a cash-generating unit
level, with this being an individual outlet.
Accounting judgements
Impairment review of cash-generating units - property, plant and equipment, right-of-use assets, computer software and goodwill For the individual outlet level impairment review, judgement has
been applied to determine the most appropriate site level profit and cash flow forecasts based on the Group forecast for Financial Year 2025 to Financial Year 2027 that was in place at the balance
sheet date.
Other sources of estimation uncertainty
Impairment review of cash-generating units property, plant and equipment, right-of-use assets, computer software and goodwill: The impairment review requires
two key sources of estimation uncertainty in calculating the value in use: the estimation of forecast cash flows for each site and the selection of an
appropriate discount rate. The discount rate is applied consistently to each cash-generating unit.
A sensitivity of changes in forecast cash flows and the discount rate is provided on page 148. The carrying value of assets to which
these estimates apply is 442 Million Pounds (2023, 452 Million Pounds).
Impairment review of cash-generating units, comprising property, plant and equipment, right-of-use assets, computer software and goodwill
Recoverable amount is determined as the higher of the value in use, or fair value less costs to sell for each outlet.
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:
Note
Carrying value
2024
£m
Impairment
charges
2024
£m
Impairment
reversals
2024
£m
Net
impairment
2024
£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)
Note
Carrying value
2023
£m
Impairment
charges
2023
£m
Impairment
reversals
2023
£m
Net
impairment
2023
£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
£m
2023
£m
Goods held for resale
27
25
Trade and other receivables
Accounting policy
Trade receivables are initially recognised at transaction price and other receivables are initially recognised at fair value. Subsequently, these assets
are measured at amortised cost. This results in their recognition at nominal value less an allowance for any doubtful debts. The allowance for
doubtful debts is recognised based on management’s expectation of losses without regard to whether an impairment trigger happened or not
(an ‘expected credit loss’ model). The Group always measures the loss allowance for trade receivables using the simplified model at an amount
equal to lifetime ECL. Loss allowance for other receivables is measured either at twelve months or lifetime ECL depending on whether the credit
risk has increased significantly since initial recognition (see financial assets impairment policy in note 4.3).
Trade and other receivables can be analysed as follows:
Current
2024
£m
2023
£m
Trade receivables
13
17
Other receivables
16
16
Prepayments
27
32
Other financial assetsa
30
58
Defined benefit pension blocked accountsb
12
–
Total trade and other receivables
98
123
Non-current
2024
£m
2023
£m
Defined benefit pension blocked accountsb
–
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.
Trade and other payables
Accounting policy
Trade and other payables are initially recognised at fair value and recognised subsequently at amortised cost.
Trade and other payables can be analysed as follows:
Current
2024
£m
2023
£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 liabilitiesa
30
58
Total trade and other payables
482
491
Non-current
2024
£m
2023
£m
Other payablesb
8
–
a. Other financial liabilities relate to cash collateral provided by a swap counterparty (see note 4.3).
b. Non-current other payables relate to contingent consideration payable following the acquisition of Pesto Restaurants Ltd (see note 5.1).
Current trade and other payables are non-interest bearing. The Directors consider that the carrying amount of trade and other payables
approximately equates to their fair value.
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
149
148
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
In summary, the carrying value of the cash-generating units and impairment charges and reversals recognised
against those cash-generating units is as follows:
Year
Type
Carrying value
in Millions
of Pounds
Impairment charges
in Millions
of Pounds
Impairment reversals
in Millions
of Pounds
Net impairment
in
Millions of Pounds
2024
blank
blank
blank
blank
blank
Total
blank
442
(37)
19
(18)
2023
blank
blank
blank
blank
Total
blank
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 Financial Year 2025 to Financial Year 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 2 Million Pounds to the net impairment
charge recognised.
Discount rate: The pre-tax discount rate applied to the forecast cash flows is derived from the Groups post-tax weighted average cost of capital (WACC).
The assumptions used in the calculation of the Groups 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 7 Million Pounds
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.
Type
2024 in Millions of Pounds
2023 in Millions
of
Pounds
Accounting policy: Trade receivables are initially recognised at transaction price and other receivables are initially recognised at fair value. Subsequently,
these assets are measured at amortised cost. This results in their recognition at nominal value less an allowance for any doubtful debts. The
allowance for doubtful debts is recognised based on managements expectation of losses without regard to whether an impairment trigger happened
or not (an expected credit loss model). The Group always measures the loss allowance for trade receivables using the simplified model at
an amount equal to lifetime ECL. Loss allowance for other receivables is measured either at twelve months or lifetime ECL depending on whether the credit
risk has increased significantly since initial recognition (see financial assets impairment policy in note 4.3).
Category
Type
2024 in Millions of
Pounds
2023 in Millions
of Pounds
Current
Other financial assets (See Note A in Table Summary)
Defined benefit pension blocked accounts (See Note B in Table Summary)
blank
Non-Current
Defined benefit pension blocked accounts (See Note B in Table Summary)
blank
47
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 2 Million Pounds (2023 3 Million Pounds) has been recognised
against trade and other receivables.
Accounting policy: Trade and other payables are initially recognised at fair value and recognised
subsequently at amortised cost.
Category
Type
2024 in Millions
of Pounds
2023 in Millions
of
Pounds
Current
Other financial liabilities (See Note A in Table Summary)
Non-Current
Other payables (See Note B in Table Summary)
8
blank
3.5 Provisions
Accounting policy
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that
an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are measured using the
Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where
the effect is material.
Onerous property provisions represent the expected unavoidable losses on onerous and vacant property leases and comprise the net lease
commitment (fixed service charges) not expected to be covered by operating revenue after all other operating costs. The provision is calculated
on a site by site basis with a provision being made for the remaining committed lease term, where a lease is considered to be onerous. Other
contractual dilapidations costs are also recorded as provisions as appropriate.
Provisions
The provision for unavoidable losses on onerous property leases has been set up to cover fixed service charge payments of vacant or loss-making
properties.
The provision for dilapidation costs has been set up to cover the estimated future dilapidation claims from landlords on leases that are within five years
of expiry.
Provisions can be analysed as follows:
Onerous property
provisions
£m
Dilapidation
provisions
£m
Total property
provisions
£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
3.6 Goodwill and other intangible assets
Accounting policies
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured
at the aggregate of the fair values of assets given and liabilities incurred or assumed by the Group in exchange for control of the acquiree.
Acquisition-related costs are recognised in the income statement as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance
with IAS 12 Income Taxes and IAS 19 Employee Benefits (revised) respectively; and
• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued
Operations are measured in accordance with that standard.
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the
acquisition date.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree,
and the fair value of the acquirer’s previously held equity interest in the acquiree over the net of the identifiable assets acquired and the liabilities
assumed at the acquisition date. If, after reassessment, the net of the identifiable assets acquired and liabilities assumed at the acquisition date
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s
previously held interest in the acquiree, the excess is recognised immediately in the income statement as a bargain purchase.
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration
arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the contingent consideration
transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise
from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts
and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments
depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not re-measured at subsequent
reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability
is re-measured at subsequent reporting dates, at fair value, with the corresponding gain or loss being recognised in the income statement.
When a business combination is achieved in stages, the Group’s previously-held interests in the acquired entity is re-measured to its acquisition
date fair value and the resulting gain or loss, if any, is recognised in the income statement. Amounts arising from interests in the acquiree prior to
the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment
would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group
reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the
measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances
that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
Goodwill is not amortised, but is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that
the carrying value may be impaired. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units
expected to benefit from the synergies of the combination. The impairment review requires management to consider the recoverable value
of the business to which the goodwill relates, based on either the fair value less costs to sell or the value in use. Value in use calculations require
management to consider the net present value of future cash flows generated by the business to which the goodwill relates. Fair value less costs
to sell is based on management’s estimate of the net proceeds which could be generated through disposing of that business. If the recoverable
amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
An impairment loss is recognised immediately in the income statement and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Computer software
Computer software and associated development costs, which are not an integral part of a related item of hardware, are capitalised as an intangible
asset and amortised on a straight-line basis over their useful life. The period of amortisation ranges between three and seven years with the
majority being three years.
Brands
Brand intangible assets recognised on acquisition are amortised on a straight-line basis over their estimated useful lives (20 years) within operating
costs. Brand intangibles are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable.
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
151
150
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Accounting policy: Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than
not that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are measured using
the Directors best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where
the effect is material.
Provisions: The provision for unavoidable losses on onerous property leases has been set up to
cover fixed service charge payments of vacant or loss-making properties.
Period
Onerous property provisions
in Millions
of Pounds
Dilapidation
provisions
in
Millions of
Pounds
Total property
provisions
in
Millions of
Pounds
blank
blank
blank
blank
Accounting policies
Business combinations and goodwill: Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for
each acquisition is measured at the aggregate of the fair values of assets given and liabilities incurred or assumed by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in the income statement as incurred.
Computer software: Computer software and associated development costs, which are not an integral part of a related item of hardware,
are capitalised as an intangible asset and amortised on a straight-line basis over their useful life. The period of amortisation
ranges between three and seven years with the majority being three years.
Brands: Brand intangible assets recognised on acquisition are amortised on a straight-line basis over their estimated useful lives (20 years) within operating
costs. Brand intangibles are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable.
3.6 Goodwill and other intangible assets continued
Intangible assets
Intangible assets can be analysed as follows:
Goodwill
£m
Brands
£m
Computer
software
£m
Total
£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
Goodwill and brands
With the exception of goodwill, there are no intangible assets with indefinite useful lives. All amortisation charges have been expensed through
operating costs.
Brand intangibles have been recognised as part of business combinations (see note 5.1). Brand intangibles are amortised over their estimated useful
lives and have an average remaining useful life of 20 years.
Impairment review
All goodwill was recognised as part of business combinations. Goodwill has been allocated to cash-generating units, being individual outlets, to test
for impairment. An impairment charge of £nil (2023 £1m) has been recognised in the current period.
Computer software has been allocated to cash-generating units, being individual outlets, to test for impairment. An impairment charge of £1m (2023
£nil) has been recognised in the current period.
Further details of the impairment review are provided in note 3.3.
The carrying values of acquired brands are subject to impairment review if changes in events or circumstances give indication the brand value
may be impaired, of which there have been none in the current period.
3.7 Associates
Accounting policy
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except
when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale
and Discontinued Operations.
Under the equity method, an investment in an associate is accounted for using the equity method from the date on which the investee becomes
an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value
of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment.
If after reassessment the Group’s share of the net fair value of the identifiable assets and liabilities are in excess of the cost of the investment, this
is recognised immediately in profit or loss in the period in which the investment is acquired.
The requirements of IAS 36 Impairment of Assets are applied to determine whether it is necessary to recognise any impairment loss with
respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested
for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs
of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that
impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is
classified as held for sale. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group
measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IFRS 9.
The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained
interest, and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the
associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on
the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously
recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities,
the Group reclassifies the gain or loss from equity to profit or loss when the equity method is discontinued.
When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit
or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership
interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a Group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognised
in the consolidated financial statements only to the extent of interests in the associate that are not related to the Group.
The nature of the activities of all of the Group’s associates is trading in pubs and restaurants, which are seen as complementing the Group’s operations
and contributing to the Group’s overall strategy.
Associates can be analysed as follows:
£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
–
The carrying value of associates of £nil (2023 £nil) relates to Fatboy Pub Company Limited. Details of this associate are provided in note 5.2.
3Sixty Restaurants Limited is no longer recognised as an associate and has been consolidated as a subsidiary from 18 April 2023, the date on which
control passed to the Group.
Section 3 – Operating assets and liabilities continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
153
152
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Intangible assets: Intangible assets can be
analysed as follows:
Category
Type
Goodwill in Millions
of Pounds
Brands in Millions
of Pounds
Computer software
in Millions
of Pounds
Total in Millions
of
Pounds
Cost
At 24 September 2022
7
blank
20
27
Acquired through business combinations (note 5.1)
1
5
blank
6
Additions
blank
blank
4
4
Disposals
blank
blank
(6)
(6)
At 30 September 2023
8
5
18
31
Acquired through business combinations (note 5.1)
5
2
blank
7
Additions
blank
blank
2
2
Disposals
blank
blank
(3)
(3)
At 28 September 2024
13
7
17
37
Accumulated
amortisation
and
impairment
At 24 September 2022
5
blank
8
13
Amortisation during the period
blank
blank
4
4
Impairment
1
blank
blank
1
Disposals
blank
blank
(4)
(4)
At 30 September 2023
6
blank
8
14
Amortisation during the period
blank
blank
4
4
Impairment
blank
blank
1
1
Disposals
blank
blank
(2)
(2)
At 28 September 2024
6
blank
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
blank
12
14
Goodwill and brands: With the exception of goodwill, there are no intangible assets with indefinite useful lives.
All amortisation charges have been expensed through operating costs.
Impairment review: All goodwill was recognised as part of business combinations. Goodwill has been allocated to cash-generating units, being individual outlets,
to test for impairment. An impairment charge of ﾣnil (2023 ﾣ1m) has been recognised in the current period.
Accounting policy: An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
In Millions of Pounds
blank
blank
blank
The carrying value of associates of nil pounds (2023, nil pounds) relates to Fatboy Pub Company Limited. Details of this associate are provided in note 5.2.
Section 4 – Capital structure and financing costs
4.1 Borrowings
Accounting policy
Borrowings, which include the Group’s secured loan notes, are stated initially at fair value (normally the amount of the proceeds) net of issue costs.
Thereafter they are stated at amortised cost using an effective interest basis. Finance costs, which are the difference between the net proceeds
and the total amount of payments to be made in respect of the instruments, are allocated over the term of the debt using the effective interest
method. Borrowing costs are not attributed to the acquisition or construction of assets and therefore no costs are capitalised within property,
plant and equipment.
Borrowings can be analysed as follows:
2024
£m
2023
£m
Current
Securitised debta,b
130
123
Unsecured revolving credit facilitiesc
(1)
(2)
Overdraftsd
12
23
Other borrowingse
2
–
Total current
143
144
Non-current
Securitised debta,b
1,041
1,186
Total borrowings
1,184
1,330
a. Further details of the assets pledged as security against the securitised debt are given on page 140.
b. Stated net of deferred issue costs.
c. At 28 September 2024 the amount of £1m (2023 £2m) represents unamortised issue costs.
d. The overdraft is within a cash pooling arrangement. In the cash flow statement, cash and cash equivalents are presented net of this overdraft (see note 4.4).
e. Short-term financing of employee advances.
2024
£m
2023
£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
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 loan notes consist of ten tranches as follows:
Initial
principal
borrowed
£m
Interest
Principal
repayment
period (all by
instalments)
Effective
interest
rate
%
Principal outstanding
Tranche
28 September
2024
£m
30 September
2023
£m
Expected
WALa
A1N
200
Floating
2011 to 2028
6.61b
62
75
2 years
A2
550
Fixed – 5.57%
2003 to 2028
5.72
112
136
2 years
A3N
250
Floating
2011 to 2028
6.69b
77c
93c
2 years
A4
170
Floating
2016 to 2028
6.37b
75
89
2 years
AB
325
Floating
2020 to 2032
6.28b
260
276
5 years
B1d
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
6.47b
50
50
9 years
D1
110
Floating
2034 to 2036
6.68b
110
110
11 years
2,555
1,151
1,274
a. Expected weighted average life (WAL) assumes no early redemption in respect of any loan notes.
b. After the effect of interest rate swaps.
c. A3N notes are US$ notes which are shown as translated to sterling at the hedged swap rate. Values at the period end spot rate are £96m (2023 £127m). Therefore the exchange
difference on the A3N notes is £19m (2023 £34m).
d. The B1 loan notes were fully repaid during the current period in accordance with the documented repayment schedule.
Principal outstanding above is reconciled to the principal outstanding and carrying value of securitised debt as disclosed on page 155 as follows.
2024
£m
2023
£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
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.
Interest and margin is payable on the floating rate notes as follows:
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%
The overall cash interest rate payable on the loan notes is 6.3% (2023 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. Further details of the covenants are provided
in the going concern review on pages 127 to 128.
At 28 September 2024, Mitchells & Butlers Retail Limited had cash and cash equivalents of £91m (2023 £54m). Of this amount £2m (2023 £4m),
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:
2024
£m
2023
£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
Liquidity facility
Under the terms of the securitisation, the Group holds a liquidity facility of £295m provided by two counterparties.
The amount drawn at 28 September 2024 is £nil (2023 £nil).
Unsecured revolving credit facilities
The Group holds a single unsecured committed revolving credit facility of £200m, which expires on 20 July 2026. The amount drawn at
28 September 2024 is £nil (2023 £nil).
There are covenants on the unsecured revolving credit facilities relating to the ratio of EBITDAR to rent plus interest and net debt to EBITDA based
on the performance of the unsecured estate. Further details of the covenants are provided in the going concern review on pages 127 and 128.
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
155
154
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Accounting policy: Borrowings, which include the Groups secured loan notes, are stated initially at fair value (normally the amount of the proceeds) net of
issue costs. Thereafter they are stated at amortised cost using an effective interest basis. Finance costs, which are the difference between the net proceeds
and the total amount of payments to be made in respect of the instruments, are allocated over the term of the debt using the effective interest method.
Borrowing costs are not attributed to the acquisition or construction of assets and therefore no costs are capitalised within property, plant and equipment.
Borrowings can be analysed as follows:
Category
Type
2024 in Millions
of Pounds
2023 in Millions
of Pounds
Current
Securitised debt (See Note A and B in Table Summary)
Unsecured revolving credit facilities (See Note C in Table Summary)
Overdrafts (See Note D in Table Summary)
Other borrowings (See Note E in Table Summary)
blank
Non-current
Securitised debt (See Note A and B in Table Summary)
Total
2024 in Millions of Pounds
2023 in Millions
of
Pounds
Securitised debt: On 13 November 2003, the Group refinanced its debt by raising ﾣ1,900m through a securitisation of the majority of its UK pubs and restaurants
owned by Mitchells and Butlers Retail Limited. On 15 September 2006 the Group completed a further debt (tap) issue to borrow an additional
ﾣ655m and refinance ﾣ450m of existing debt at lower cost.
The loan notes consist of ten tranches as follows:
Initial principal borrowed
in Millions of Pounds
Principal outstanding
on
28 September
2024
in Millions
of Pounds
Principal Outstand
on 30
September
2023
in Millions
of Pounds
Expected WAL
(See Note
A in Table
Summary)
6.61 (See
Note
B in Table
Summary)
6.69 (See
Note
B in Table
Summary)
77 (See Note
C in Table
Summary)
93 (See Note C
in Table Summary)
6.37 (See
Note
B in Table
Summary)
6.28 (See
Note
B in Table
Summary)
blank
6.47 (See
Note
B in Table
Summary)
6.68 (See
Note
B in Table
Summary)
Total
blank
blank
blank
blank
Type
2024 in Millions of pounds
2023 in Millions
of pounds
A3N US Dollar notes exchange difference Principal outstanding at spot rate
The securitisation is governed by various covenants, warranties and events of default, many of which apply to Mitchells and Butlers Retail Limited, the Groups
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. Further details of the covenants are provided in the going concern review
on pages 127 to 128.
At 28 September 2024, Mitchells and Butlers Retail Limited had cash and cash equivalents of 91 Million Pounds (2023 54 Million Pounds). Of this amount
2 Million Pounds (2023 4 Million Pounds), 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:
Type
2024 in Millions of Pounds
2023 in Millions
of
Pounds
Liquidity facility: Under the terms of the securitisation, the Group holds a liquidity facility of 295 Million
Pounds provided by two counterparties.
The amount drawn at 28 September 2024 is nil pounds (2023 nil pounds).
Unsecured revolving credit facilities: The Group holds a single unsecured committed revolving credit facility of 200 Million Pounds, which expires
on 20 July 2026. The amount drawn at 28 September 2024 is nil pounds (2023 nil pounds).
4.2 Finance costs and income
2024
52 weeks
£m
2023
53 weeks
£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)
4.3 Financial instruments
Accounting policies
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions
of the instrument.
Financial assets
All financial assets are recognised or derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms
require delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value,
plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses (ECLs) on financial assets, where applicable. The amount of expected credit
losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial asset.
The Group adopts the simplified approach detailed in IFRS 9 for trade receivables and finance lease receivables and therefore recognises lifetime
ECL on these assets. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical
credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current
as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial assets, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition.
However, if the credit risk on the financial asset has not increased significantly since initial recognition, the Group measures the loss allowance
for that financial instrument at an amount equal to twelve-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
In contrast, twelve-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that
are possible within twelve months after the reporting date.
Definition of default
The Group considers financial assets to be in default when information developed internally or obtained from external sources indicates that
a debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held by the Group).
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets are credit-impaired. A financial asset is ‘credit-impaired’ when one or more
events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Write-off policy
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic
prospect of recovery. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking
into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there
is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted
by forward-looking information. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount
at the reporting date.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance
with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.
If the Group has measured the loss allowance for a financial asset at an amount equal to lifetime ECL in the previous reporting period,
but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the loss allowance
at an amount equal to twelve-month ECL at the current reporting date, except for assets for which the simplified approach was used.
The Group recognises an impairment gain or loss in profit or loss for all financial assets with a corresponding adjustment to their carrying amount
through a loss allowance account.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial
asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group does not retain substantially all the risks
and rewards of ownership but continues to control a transferred asset, the Group recognises its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset,
the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss.
Financial liabilities
The Group has financial liabilities relating to borrowings, for which the accounting policy is provided in note 4.1. Other financial liabilities
are initially measured at fair value, net of transaction costs.
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at fair value through profit or loss (FVTPL).
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or expired. The difference
between the carrying amount of the financial liability discharged and the consideration paid and payable is recognised in profit or loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating finance charges over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash flows (including all fees and points paid or received that
form an integral part of the effective interest rate, transaction costs and other premiums or discounts) over the expected life of the debt instrument,
or where appropriate, a shorter period, to the amortised cost of a financial liability. Finance charges are recognised on an effective interest basis
for all debt instruments.
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including
interest rate and currency swaps.
Derivative financial instruments are initially measured at fair value on the contract date and are remeasured to fair value at each reporting date.
The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument,
in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial
liability. Derivatives are not offset in the financial statements unless the Group has both the current legal right to offset and intention to settle
on a net basis or realise simultaneously. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the
instrument is more than twelve months and it is not expected to be realised or settled within twelve months. Other derivatives are presented as
current assets or current liabilities.
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
157
156
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Category
Type
2024, 52 weeks
in Millions
of Pounds
2023, 53 weeks
in Millions
of Pounds
Finance
costs
Interest on securitised debt
Finance
income
Interest receivable - cash
Net
pensions
finance
charge
(note
4.5)
Total
Accounting policies: Financial assets and financial liabilities are recognised in the Group's balance sheet when
the Group becomes a party to the contractual provisions of the instrument.
Financial assets: All financial assets are recognised or derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose
terms require delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair
value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Impairment of financial assets: The Group recognises a loss allowance for expected credit losses (ECLs) on financial assets, where applicable. The amount
of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial asset.
Definition of default: The Group considers financial assets to be in default when information developed internally or obtained from external sources indicates
that a debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held by the Group).
Credit-impaired financial assets: At each reporting date, the Group assesses whether financial assets are credit-impaired. A financial asset is credit-impaired
when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Write-off policy: The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no
realistic prospect of recovery. Financial assets written off may still be subject to enforcement activities under the Groups recovery procedures, taking
into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
Measurement and recognition of expected credit losses: The measurement of expected credit losses is a function of the probability of default, loss given
default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given
default is based on historical data adjusted by forward-looking information. As for the exposure at default, for financial assets, this is represented
by the assets gross carrying amount at the reporting date.
Derecognition of financial assets: The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group does not retain substantially
all the risks and rewards of ownership but continues to control a transferred asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial
asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities: The Group has financial liabilities relating to borrowings, for which the accounting policy is provided in note 4.1. Other financial
liabilities are initially measured at fair value, net of transaction costs.
Derecognition of financial liabilities: The Group derecognises financial liabilities when, and only when, the Groups obligations are discharged, cancelled
or expired. The difference between the carrying amount of the financial liability discharged and the consideration paid and payable is recognised
in profit or loss.
Effective interest method: The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating finance charges
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flows (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) over the expected life of the debt
instrument, or where appropriate, a shorter period, to the amortised cost of a financial liability. Finance charges are recognised on an effective interest
basis for all debt instruments.
Derivative financial instruments: The Group enters into a variety of derivative financial instruments to manage its exposure to interest
rate and foreign exchange rate risks, including interest rate and currency swaps.
4.3 Financial instruments continued
Accounting policies continued
Hedge accounting
The Group designates its derivative financial instruments, i.e. interest rate and currency swaps, as cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and
on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in cash flows of the hedged
item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:
• there is an economic relationship between the hedged item and the hedging instrument;
• the effect of credit risk does not dominate the value changes that result from that economic relationship; and
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for
that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge)
so that it meets the qualifying criteria again.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income and accumulated under the heading of hedging reserve, limited to the cumulative change in fair value of the hedged
item from inception of the hedge.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when
the hedged item affects profit or loss, in the same line as the recognised hedged item. This transfer does not affect other comprehensive income.
Furthermore, if the Group expects that some or all of the loss accumulated in the hedging reserve will not be recovered in the future, that amount
is immediately reclassified to profit or loss.
Hedge accounting is discontinued only when the hedging relationship ceases to meet the qualifying criteria (after rebalancing, if applicable).
This includes instances when the hedging instrument expires or is sold or terminated. The discontinuation is accounted for prospectively. Any gain
or loss recognised in other comprehensive income and accumulated in the hedging reserve at that time remains in equity and is reclassified to profit
or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the
hedging reserve is reclassified immediately to profit or loss.
Financial risk management
Financial risk is managed by the Group’s Treasury function. The Group’s Treasury function is governed by a Board Approved Treasury Policy
Statement which details the key objectives and policies for the Group’s treasury management. The Treasury Committee ensures that the Treasury
Policy is adhered to, monitors its operation and agrees appropriate strategies for recommendation to the Board. The Treasury Policy Statement is
reviewed annually, with recommendations for change made to the Board, as appropriate. The Group Treasury function is operated as a cost centre
and is the only area of the business permitted to transact treasury deals. It must also be consulted on other related matters such as the provision
of guarantees or the financial implications of contract terms.
An explanation of the Group’s financial instrument risk management objectives and strategies is set out below.
The main financial risks which impact the Group result from funding and liquidity risk, credit risk, capital risk and market risk, principally as a result
of changes in interest and currency rates. Derivative financial instruments, principally interest rate and foreign currency swaps, are used to manage
market risk. Derivative financial instruments are not used for trading or speculative purposes.
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. 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) along with an unsecured committed revolving credit facility of £200m. The terms of the securitisation and the revolving credit facilities contain
various financial covenants. Compliance with these covenants is monitored by Group Treasury. The Group also has uncommitted credit facilities of
£5m, together with short-term financing in respect of employee advances (£2m).
The Group prepares a rolling daily cash forecast covering a six week period and an annual cash forecast by period. These forecasts are reviewed
on a daily basis and are used to manage the investment and borrowing requirements of the Group. A combination of cash pooling and zero balancing
agreements are in place to ensure the optimum liquidity position is maintained. The Group maintains sufficient cash balances or committed facilities
outside the securitisation to ensure that it can meet its medium-term anticipated cash flow requirements.
The maturity table below details the contractual undiscounted cash flows (both principal and interest), based on the prevailing period end interest
and exchange rates, for the Group’s financial liabilities, after taking into account the effect of interest rate and currency swaps (which are settled
gross) and assumes no early redemption in respect of any loan notes. As such these amounts will not always reconcile to amounts disclosed in the
Group Balance Sheet.
Within
one year
£m
One to
two years
£m
Two to
three years
£m
Three to
four years
£m
Four to
five years
£m
More than
five years
£m
Total
£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)
Credit risk
The Group Treasury function enters into contracts with third parties in respect of the investment of surplus funds and derivative financial instruments
for risk management purposes. These activities expose the Group to credit risk against the counterparties. To mitigate this exposure, Group Treasury
operates policies that restrict the general investment of surplus funds and the entering into of derivative transactions to counterparties that have
a minimum credit rating of ‘A’ (long-term) and ‘A1’/‘P1’/‘F1’ (short-term). Where ratings subsequently drop below the policy minimum additional
approval is sought from the Board to retain the position, or action is taken to move to a higher rated counterparty. The minimum long-term rating of
any Group counterparty during the year was ‘A’. The amount that can be invested or transacted at various ratings levels is restricted under the policy.
Counterparties to derivative financial instruments may also be required to post collateral with the Group where their credit rating falls below a
predetermined level. At the period end a collateral amount of £30m (2023 £58m) is held by the Group and is recognised as an other financial asset
and other financial liability in the balance sheet.
To minimise credit risk exposure against individual counterparties, investments and derivative transactions are entered into with a range of
counterparties. The maximum investment exposure with any counterparty during the year was £49m (2023 £50m). The Group held investments
with ten counterparties during the year (2023 eleven). The Group Treasury function reviews credit ratings, as published by Moody’s, Standard &
Poor’s and Fitch Ratings, current exposure levels and the maximum permitted exposure at given credit ratings, for each counterparty on a daily basis.
Any exceptions are required to be formally reported to the Treasury Committee on a four-weekly basis.
Trade receivables and other receivables mainly represent amounts due from tenants of unlicensed properties, amounts due from Group suppliers
and cash collateral deposits held by third parties. Credit exposure relating to tenants is ordinarily considered to be low risk, with an expected lifetime
credit loss calculated at the period end to reflect the risk of irrecoverable amounts. To minimise credit risk new tenants are assessed using an external
credit rating system before they are approved for tenancy. Credit exposure is reduced for the amounts due from Group suppliers as the Group holds
offsetting amounts in trade and other payables that are due to some of these suppliers. Credit risk on cash collateral deposits held by third parties are
considered to be low credit risk as they are held with reputable banking institutions by third parties.
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
159
158
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Hedge accounting: The Group designates its derivative financial instruments, i.e. interest
rate and currency swaps, as cash flow hedges.
Cash flow hedges: The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated under the heading of hedging reserve, limited
to the cumulative change in fair value of the hedged item from inception of the hedge.
Financial risk management: Financial risk is managed by the Groups Treasury function. The Groups Treasury function is governed by a Board Approved
Treasury Policy Statement which details the key objectives and policies for the Groups treasury management. The Treasury Committee ensures
that the Treasury Policy is adhered to, monitors its operation and agrees appropriate strategies for recommendation to the Board. The Treasury Policy
Statement is reviewed annually, with recommendations for change made to the Board, as appropriate. The Group Treasury function is operated as
a cost centre and is the only area of the business permitted to transact treasury deals. It must also be consulted on other related matters such as the provision
of guarantees or the financial implications of contract terms.
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 Groups debt, alongside the prevailing financial projections. This enables it to ensure that funding levels are
appropriate to support the Groups plans.
The current funding arrangements of the Group consist of the securitised notes issued by Mitchells and Butlers Finance plc (and associated liquidity facility) along with an unsecured committed revolving
credit facility of 200 Million Pounds. The terms of the securitisation and the revolving credit facilities contain various financial covenants. Compliance with these covenants is monitored by
Group Treasury. The Group also has uncommitted credit facilities of 5 Million Pounds, together with short-term financing in respect of employee advances (2 Million Pounds).
The maturity table below details the contractual undiscounted cash flows (both principal and interest), based on the prevailing period end interest and exchange
rates, for the Group's financial liabilities, after taking into account the effect of interest rate and currency swaps (which are settled gross) and assumes
no early redemption in respect of any loan notes. As such these amounts will not always reconcile to amounts disclosed in the Group Balance Sheet.
Date
Category
Within one year
in Millions
of Pounds
One to two years
in Millions
of Pounds
Two to three
years in
Millions of
Pounds
Three to four
years in
Millions of
Pounds
Four to five years
in Millions
of Pounds
More than five
years in
Millions of
Pounds
Total in Millions
of Pounds
28
September
2024
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
blank
102
Derivative financial asset payments
(20)
(20)
(20)
(20)
(5)
blank
(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)
blank
blank
blank
blank
blank
(114)
Other payables
(19)
(9)
blank
blank
blank
blank
(28)
Accrued charges
(186)
blank
blank
blank
blank
blank
(186)
Other financial liabilities
(30)
blank
blank
blank
blank
blank
(30)
30
September
2023
30 September 2023 Securitised debt loan
notes
(206)
(204)
(203)
(203)
(202)
(696)
(1,714)
Derivative financial liabilities (settled net) blank
(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)
blank
blank
blank
blank
blank
(100)
Other payables
(22)
blank
blank
blank
blank
blank
(22)
Accrued charges
(182)
blank
blank
blank
blank
blank
(182)
Other financial liabilities
(58)
blank
blank
blank
blank
blank
(58)
Credit risk: The Group Treasury function enters into contracts with third parties in respect of the investment of surplus funds and derivative financial instruments
for risk management purposes. These activities expose the Group to credit risk against the counterparties. To mitigate this exposure, Group Treasury
operates policies that restrict the general investment of surplus funds and the entering into of derivative transactions to counterparties that have a minimum
credit rating of A (long-term) and A1/P1/F1 (short-term). Where ratings subsequently drop below the policy minimum additional approval
is sought from the Board to retain the position, or action is taken to move to a higher rated counterparty. The minimum long-term rating of any Group
counterparty during the year was A. The amount that can be invested or transacted at various ratings levels is restricted under the policy. Counterparties
to derivative financial instruments may also be required to post collateral with the Group where their credit rating falls below a predetermined
level. At the period end a collateral amount of 30 Million Pounds (2023 58 Million Pounds) is held by the Group and is recognised as an other
financial asset and other financial liability in the balance sheet.
To minimise credit risk exposure against individual counterparties, investments and derivative transactions are entered into with a range of counterparties. The maximum investment exposure with
any counterparty during the year was 49 Million Pounds (2023 50 Million Pounds). The Group held investments with ten counterparties during the year (2023 eleven). The Group Treasury function
reviews credit ratings, as published by Moodys, Standard and Poors and Fitch Ratings, current exposure levels and the maximum permitted exposure at given credit ratings, for each counterparty
on a daily basis. Any exceptions are required to be formally reported to the Treasury Committee on a four-weekly basis.
4.3 Financial instruments continued
The Group’s maximum credit exposure at the balance sheet date was:
FVTPL
£m
12-month
ECL
£m
Lifetime
ECL
£m
Total
£m
28 September 2024:
Cash and cash equivalentsa
–
164
–
164
Trade receivablesb
–
–
13
13
Other receivablesb
–
16
–
16
Other financial assets
–
30
–
30
Defined benefit pension blocked account
–
12
–
12
Finance lease receivablesc
–
1
11
12
Derivatives
19
–
–
19
30 September 2023:
Cash and cash equivalentsa
–
103
–
103
Trade receivablesb
–
–
17
17
Other receivablesb
–
16
–
16
Other financial assets
–
58
–
58
Defined benefit pension blocked account
–
47
–
47
Finance lease receivablesc
–
–
12
12
Derivatives
35
–
–
35
a. Cash and cash equivalents as presented in the cash flow statement. This is presented net of an overdraft within a cash pooling arrangement, to which the Group has a legal right
of offset.
b. Trade receivables and other receivables are shown net of an expected credit loss allowance, as shown in note 3.4.
c. Finance lease receivables expected credit loss allowance is immaterial, as described in note 3.2.
Capital management
The Group’s capital base is comprised of its net debt (analysed in note 4.4) plus total equity (disclosed on the face of the Group balance sheet).
The objective is to maintain a capital base which is sufficiently strong to support the ongoing development of the business as a going concern, including
the amenity, and cash flow generation of the pub estate. By keeping debt and headroom against its debt facilities at an appropriate level, the Group
ensures that it maintains a strong credit position, whilst maximising value for shareholders and adhering to its covenants and other restrictions
associated with its debt (see note 4.1). In managing its capital structure, from time to time the Group may realise value from non-core assets, buy back
or issue new shares, initiate and vary its dividend payments and seek to vary or accelerate debt repayments. The Group’s policy is to ensure that the
maturity of its debt profile supports its strategic objectives. The Board considers the latest covenant compliance, headroom projections and projected
balance sheet positions periodically throughout the period, based on the advice of the Treasury Committee which meets on a four-weekly basis.
The Treasury Committee is chaired by the Group Treasurer and monitors Treasury performance and compliance with Board-approved policies.
The Group Chief Financial Officer is also a member of the Committee.
Total capital at the balance sheet date is as follows:
2024
£m
2023
£m
Net debt excluding leases (note 4.4)
989
1,170
Total equity
2,566
2,130
Total capital
3,555
3,300
Market risk
The Group is exposed to the risk that the fair value of future cash flows of its financial instruments will fluctuate because of changes in market prices.
Market risk comprises foreign currency and interest rate risk.
Foreign currency risk
The most significant currency risk the Group faces is in relation to the class A3N floating rate notes. At issuance of these notes, the Group entered into
a cross currency interest rate swap to manage the foreign currency exposure resulting from both the US$ principal and initial interest elements of the
notes. The A3N notes have a carrying value of £96m (2023 £127m) and form part of the securitised debt (see note 4.1).
Sensitivity analysis
Further to the step-up on the A3N notes on 15 December 2010, the Group has additional foreign currency exposure as a result of the increase in US$
finance costs. A movement of 10% in the US$ exchange rate would have £nil (2023 £nil) impact on the reported Group profit and £16m (2023 £12m)
impact on the reported Group equity.
The Group has no significant profit and loss exposure as a result of retranslating monetary assets and liabilities at different exchange rates. As the
Group is predominantly UK-based and acquires the majority of its supplies in sterling, it has no significant direct currency exposure from its operations.
Interest rate risk
The Group has a mixture of fixed and floating interest rate debt instruments and manages the variability in cash flows resulting from changes in
interest rates by using derivative financial instruments. Where the necessary criteria are met, the Group minimises the volatility in its consolidated
financial statements through the adoption of the hedge accounting provisions permitted under IFRS 9. The interest rate exposure resulting from the
Group’s £1.2bn securitisation is largely fixed, either as a result of the notes themselves being issued at fixed interest rates, or through a combination
of floating rate notes against which effective interest rate swaps are held, which are eligible for hedge accounting.
A number of the Group’s financial instruments were initially issued with LIBOR as their interest reference rate. 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
Sterling Overnight Index Average (SONIA) based rate in respect of sterling and a Secured Overnight Financing Rate (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 providers (using amended reference rates consistent with those agreed under the bonds).
All sterling-based facilities and agreements referencing Sterling LIBOR transitioned in prior periods to reference SONIA, plus a credit adjustment
spread of 11.93 basis points to maintain an economically equivalent position, for periods commencing on or after 1 January 2022. The facilities
previously referencing US dollar LIBOR transitioned to SOFR plus 26.161 basis points for periods commencing on or after 1 July 2023.
As part of the transition, all of the Group’s hedge relationships were reviewed and these continue to be highly effective. Hedge documentation was
updated in accordance with the reliefs permitted in the amendments to IFRS 9, designating the new interest reference rate in both the hedged item
and the hedging instrument. As a result of the transition, there was no impact on the amounts recognised in the income statement or statement
of other comprehensive income.
There has been no change to interest rate exposure in the current period. This is consistent with the Group Treasury policy on interest rate
management.
Sensitivity analysis
The sensitivity analysis below has been calculated based on the Group’s exposure to interest rates for both derivative and non-derivative instruments
as at the balance sheet date. A 1% movement is used when reporting interest rate risk internally to key management personnel and represents
management’s assessment of this reasonably possible change in interest rates.
For floating rate liabilities, which are not hedged by derivative instruments, the analysis has been prepared assuming that the liability outstanding at
the balance sheet date was outstanding for the whole period. For interest income the analysis assumes that cash and cash equivalents and other cash
deposits that were held in interest bearing accounts at the balance sheet date were held for the whole period.
The Group’s sensitivity to a 1% increase in interest rates is detailed below:
2024
£m
2023
£m
Interest incomea
1
2
Interest expenseb
–
–
Profit impact
1
2
Derivative financial instruments (fair values)c
40
31
Total equity
41
33
a. Represents interest income earned on cash and cash equivalents and other cash deposits (these are defined in note 4.1).
b. The element of interest expense which is not matched by payments and receipts under cash flow hedges which would otherwise offset the interest rate exposure of the Group.
c. The impact on total equity from movements in the fair value of cash flow hedges.
Derivative financial instruments
Cash flow hedges
Changes in cash flow hedge fair values are recognised in the hedging reserve in equity to the extent that the hedges are effective. The cash flow
hedges detailed below have been assessed as being highly effective during the period and are expected to remain highly effective over the remaining
contract lives. The following amounts have been recognised during the period:
2024
52 weeks
£m
2023
53 weeks
£m
Losses arising during the period
(34)
(9)
Reclassification adjustments for losses included in profit or loss within finance costs
11
30
(23)
21
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
161
160
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
The Groups maximum credit exposure at the balance sheet
date was:
Date
Category
FVTPL in Millions
of Pounds
12-month ECL
in Millions
of Pounds
Lifetime ECL
in Millions
of Pounds
Total in Millions
of
Pounds
28
September
2024:
Cash and cash equivalents (See Note A in Table Summary)
blank
164
blank
164
Trade receivables (See Note B in Table Summary)
blank
blank
13
13
Other receivables (See Note B in Table Summary)
blank
16
blank
16
Other financial assets
blank
30
blank
30
Defined benefit pension blocked account
blank
12
blank
12
Finance lease receivables (See Note C in Table Summary)
blank
1
11
12
Derivatives
19
blank
blank
19
30
September
2023:
Cash and cash equivalents (See Note A in Table Summary)
blank
103
blank
103
Trade receivables (See Note B in Table Summary)
blank
blank
17
17
Other receivables (See Note B in Table Summary)
blank
16
blank
16
Other financial assets
blank
58
blank
58
Defined benefit pension blocked account
blank
47
blank
47
Finance lease receivables (See Note C in Table Summary)
blank
blank
12
12
Derivatives
35
blank
blank
35
Capital management: The Groups capital base is comprised of its net debt (analysed in note 4.4) plus total equity (disclosed on the face of the Group balance
sheet). The objective is to maintain a capital base which is sufficiently strong to support the ongoing development of the business as a going concern,
including the amenity, and cash flow generation of the pub estate. By keeping debt and headroom against its debt facilities at an appropriate level, the
Group ensures that it maintains a strong credit position, whilst maximising value for shareholders and adhering to its covenants and other restrictions associated
with its debt (see note 4.1). In managing its capital structure, from time to time the Group may realise value from non-core assets, buy back or issue
new shares, initiate and vary its dividend payments and seek to vary or accelerate debt repayments. The Groups policy is to ensure that the maturity
of its debt profile supports its strategic objectives. The Board considers the latest covenant compliance, headroom projections and projected balance
sheet positions periodically throughout the period, based on the advice of the Treasury Committee which meets on a four-weekly basis. The Treasury
Committee is chaired by the Group Treasurer and monitors Treasury performance and compliance with Board-approved policies. The Group Chief Financial
Officer is also a member of the Committee.
Total capital at the balance sheet date is as follows:
Category
2024 in Millions of Pounds
2023 in Millions
of Pounds
Market risk: The Group is exposed to the risk that the fair value of future cash flows of its financial instruments will fluctuate because
of changes in market prices. Market risk comprises foreign currency and interest rate risk.
Foreign currency risk: The most significant currency risk the Group faces is in relation to the class A3N floating rate notes. At issuance of these notes, the Group
entered into a cross currency interest rate swap to manage the foreign currency exposure resulting from both the US$ principal and initial interest elements
of the notes. The A3N notes have a carrying value of 96 Million Pounds (2023 127 Million Pounds) and form part of the securitised debt (see note 4.1).
Sensitivity analysis: Further to the step-up on the A3N notes on 15 December 2010, the Group has additional foreign currency exposure as a result of the increase
in US Dollars finance costs. A movement of 10% in the US Dollars exchange rate would have nil Pounds (2023 nil Pounds) impact on the reported
Group profit and 16 Million Pounds (2023 12 Million Pounds) impact on the reported Group equity.
Interest rate risk: The Group has a mixture of fixed and floating interest rate debt instruments and manages the variability in cash flows resulting from changes
in interest rates by using derivative financial instruments. Where the necessary criteria are met, the Group minimises the volatility in its consolidated
financial statements through the adoption of the hedge accounting provisions permitted under IFRS 9. The interest rate exposure resulting from
the Groups ﾣ1.2bn securitisation is largely fixed, either as a result of the notes themselves being issued at fixed interest rates, or through a combination
of floating rate notes against which effective interest rate swaps are held, which are eligible for hedge accounting.
Sensitivity analysis: The sensitivity analysis below has been calculated based on the Groups exposure to interest rates for both derivative and non-derivative
instruments as at the balance sheet date. A 1% movement is used when reporting interest rate risk internally to key management personnel and
represents managements assessment of this reasonably possible change in interest rates.
Type
2024 in Millions
of Pounds
2023 in Millions
of Pounds
Interest income (See Note A in Table Summary)
Interest expense (See Note B in Table Summary)
blank
blank
Derivative financial instruments (fair values) (See Note C in Table Summary)
Derivative financial instruments
Cash flow hedges: Changes in cash flow hedge fair values are recognised in the hedging reserve in equity to the extent that the hedges are effective. The cash
flow hedges detailed below have been assessed as being highly effective during the period and are expected to remain highly effective over the remaining
contract lives. The following amounts have been recognised during the period:
Category
2024, 52 weeks in Millions of
Pounds
2023, 53 weeks
in Millions
of
Pounds
Total
4.3 Financial instruments continued
Cash flow hedges – securitised borrowings
The nominal and carrying values of cash flow hedges at the balance sheet date, together with the changes in fair value of cash flow hedges during the
period, are shown below.
Nominal amount
of hedging
instrument
£m
Carrying amount of
hedging instrument
Changes in fair
value used for
calculating hedge
ineffectiveness
£m
Assets
£m
Liabilities
£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)
The cash flows on the interest rate swaps occur quarterly, receiving a floating rate of interest based on SONIA plus a credit adjustment spread of 11.93
basis points, and paying a fixed rate of 4.78% (2023 4.81%). The contract maturity dates match those of the hedged item. No hedge ineffectiveness on
the interest rate swaps was recognised in profit or loss in the current or prior period.
The cash flows on the cross currency swap occur quarterly, receiving a floating rate of interest based on SOFR and paying a floating rate of interest at
SONIA plus a credit adjustment spread of 11.93 basis points in sterling. The ineffectiveness on the cross currency swaps due to foreign currency basis
spread was immaterial in both the current and prior period.
The cash flows arising from interest rate swap positions on the same counterparty may be settled as a net position. The cross currency interest rate
swap is held under a separate agreement and cash movements for this instrument are settled individually. In the event of default, the interest rate
swaps and cross currency swaps with counterparty B may be settled net, as shown below.
The position at 28 September 2024 is as follows.
Gross position
£m
Positions netted
in balance sheet
£m
Balance sheet
position
£m
Positions that
could be net in
balance sheet
but are not
£m
Overall net
exposure
£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)
The position at 30 September 2023 was as follows.
Gross position
£m
Positions netted
in balance sheet
£m
Balance sheet
position
£m
Positions that
could be net in
balance sheet
but are not
£m
Overall net
exposure
£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
Fair values of derivative financial instruments
The fair values of the derivative financial instruments were measured at 28 September 2024 and may be subject to material movements in the period
subsequent to the balance sheet date. The fair values of the derivative financial instruments are reflected on the balance sheet as follows:
Derivative financial instruments – fair value
Non-current
assets
£m
Current
assets
£m
Current
liabilities
£m
Non-current
liabilities
£m
Total
£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
Reconciliation of movements in derivative values
The tables below detail changes in the Group’s derivatives, including both cash and non-cash changes where appropriate. Changes in the Group’s
borrowings are disclosed in the net debt reconciliation in note 4.4.
Movements in derivative values for the 52 weeks ended 28 September 2024 are represented by:
At
30 September
2023
£m
Cash
movements
£m
Fair value
movements
£m
At
28 September
2024
£m
Cash flow hedges
28
(4)
(34)
(10)
Total derivatives
28
(4)
(34)
(10)
Movements in derivative values for the 53 weeks ended 30 September 2023 are represented by:
At
24 September
2022
£m
Cash
movements
£m
Fair value
movements
£m
At
30 September
2023
£m
Cash flow hedges
31
(1)
(2)
28
Share options
1
–
(1)
–
Total derivatives
32
(1)
(3)
28
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
163
162
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Cash flow hedges securitised borrowings: The nominal and carrying values of cash flow hedges at the balance
sheet date, together with the changes in fair value of cash flow hedges during the period, are shown below.
Nominal amount
of hedging
instrument
in Millions
of Pounds
Carrying amount
of hedging
instrument:
Assets
in Millions
of Pounds
Carrying amount
of hedging
instrument:
Liabilities
in
Millions of
Pounds
Changes in fair
value used
for calculating
hedge
ineffectiveness
in
Millions of Pounds
2024: Interest rate risk - 10 interest rate swaps
blank
2024: Foreign exchange risk - Cross currency swap
blank
2023: Interest rate risk - 10 interest rate swaps
blank
2023: Foreign exchange risk - Cross currency swap
blank
The position at 28 September 2024 is as follows.
Category
Gross position in Millions of
Pounds
Positions netted
in balance
sheet
in Millions
of Pounds
Balance sheet
position
in Millions
of Pounds
Positions that could
be net in
balance sheet
but are not
in Millions of
Pounds
Overall net
exposure
in
Millions of
Pounds
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
Category
Gross position in
Millions of Pounds
Positions netted
in balance
sheet
in Millions
of Pounds
Balance sheet
position
in Millions
of Pounds
Positions that
could be net
in balance
sheet
but are not
in Millions
of Pounds
Overall net
exposure
in
Millions of
Pounds
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
blank
Fair values of derivative financial instruments: The fair values of the derivative financial instruments were measured at 28 September 2024 and may be subject
to material movements in the period subsequent to the balance sheet date. The fair values of the derivative financial instruments are reflected on the
balance sheet as follows:
Derivatives at fair value designated in cash flow hedges:
Derivative financial
instruments
- fair
value: Non-current
assets
in Millions
of Pounds
Derivative financial
instruments
-
fair value: Current
assets
in Millions
of Pounds
Derivative financial
instruments
-
fair value: Current
Liabilities
in
Millions of
Pounds
Derivative financial
instruments
-
fair value: Non-Current
Liabilities
in Millions
of Pounds
Derivative
financial
instruments
-
fair value:
Total
in Millions
of
Pounds
Interest rate swaps
blank
blank
Cross currency swap
blank
blank
blank
28 September 2024
blank
30 September 2023
blank
Reconciliation of movements in derivative values: The tables below detail changes in the Groups derivatives, including both cash and non-cash changes
where appropriate. Changes in the Groups borrowings are disclosed in the net debt reconciliation in note 4.4.
Movements in derivative values for the 52 weeks ended 28 September 2024 are represented by:
Category
At 30 September 2023 in Millions of Pounds Cash movements
in
Millions of
Pounds
Fair value movements
in
Millions of
Pounds
At 28 September
2024
in Millions
of Pounds
Category
At 24 September 2022 in Millions of PoundsCash movements
in
Millions of
Pounds
Fair value movements
in
Millions of
Pounds
At 30 September
2023
in Millions
of Pounds
blank
blank
4.3 Financial instruments continued
Fair value of financial assets and liabilities
The fair value and carrying value of financial assets and liabilities by category is as follows:
2024
2023
Carrying value
£m
Fair value
£m
Carrying value
£m
Fair value
£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)
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 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.
Other financial assets and liabilities are either short term in nature or their book values approximate to fair values.
Fair value of derivative financial instruments
The fair value of the Group’s derivative financial instruments is calculated by discounting the expected future cash flows of each instrument at an
appropriate discount rate to a ‘mark to market’ position and then adjusting this to reflect any non-performance risk associated with the counterparties
to the instrument.
IFRS 13 Financial Instruments requires the Group’s derivative financial instruments to be disclosed at fair value and categorised in three levels
according to the inputs used in the calculation of their fair value:
• Level 1 instruments use quoted prices as the input to fair value calculations;
• Level 2 instruments use inputs, other than quoted prices, that are observable either directly or indirectly;
• Level 3 instruments use inputs that are unobservable.
The table below sets out the valuation basis of derivative financial instruments held at fair value by the Group:
Fair value at 28 September 2024
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets:
Currency swaps
–
19
–
19
Financial liabilities:
Interest rate swaps
–
(29)
–
(29)
–
(10)
–
(10)
Fair value at 30 September 2023
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets:
Currency swaps
–
35
–
35
Financial liabilities:
Interest rate swaps
–
(7)
–
(7)
–
28
–
28
4.4 Net debt
Accounting policies
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.
Net debt
Net debt comprises cash and cash equivalents, cash deposits net of borrowings, discounted lease liabilities, derivatives hedging securitised
debt and short-term financing for advances to employees. Net debt is presented on a constant currency basis, due to the inclusion of the fixed
exchange rate component of the cross currency swap (as described in note 4.3). Cash flows on the interest rate and cross currency swaps are
shown within interest paid in the Group cash flow statement.
Net debt
Note
2024
£m
2023
£m
Cash and cash equivalents
176
126
Overdraft
4.1
(12)
(23)
Cash and cash equivalents as presented in the cash flow statementa
164
103
Securitised debt
4.1
(1,171)
(1,309)
Unsecured revolving credit facility
4.1
1
2
Derivatives hedging securitised debtb
4.1
19
34
Short-term financing of employee advancesc
4.1
(2)
–
Net debt excluding leases
(989)
(1,170)
Lease liabilities
3.2
(447)
(463)
Net debt including leases
(1,436)
(1,633)
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$ denominated A3N loan notes. This amount is disclosed
separately to remove the impact of exchange movements which are included in the securitised debt amount. Derivatives hedging debt restates the US$ debt at $1.675:£1.
c. Advances to employees is a borrowing from Wagestream.
Movement in net debt excluding leases
2024
52 weeks
£m
2023
53 weeks
£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)
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
165
164
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Fair value of financial assets and liabilities: The fair value and carrying value of financial assets and
liabilities by category is as follows:
Category
Type
Carrying Value for
2024 in Millions
of Pounds
Fair Value for
2024 in Millions
of Pounds
Carrying Value
for 2023
in Millions
of Pounds
Fair Value for
2023 in Millions
of Pounds
Financial
assets
at
amortised
cost:
Cash and cash equivalents (note 4.4)
Total
Financial
assets
-
derivatives
at
FVTPL:
Derivative instruments in designated hedge accounting relationships (note
4.3)
Total
Financial
liabilities
at
amortised
cost:
Borrowings (note 4.1)
Total
Financial
liabilities
-
derivatives
at
FVTPL:
Derivative instruments in designated hedge accounting relationships (note
4.3)
Fair value of derivative financial instruments: The fair value of the Groups derivative financial instruments is calculated by discounting the expected future cash
flows of each instrument at an appropriate discount rate to a mark to market position and then adjusting this to reflect any non-performance risk associated
with the counterparties to the instrument.
Level 1 in Millions
of Pounds
Level 2 in Millions
of Pounds
Level 3 in Millions
of Pounds
Total in Millions
of Pounds
Financial assets: Currency swaps
blank
blank
Financial liabilities: Interest rate swaps
blank
blank
Total
blank
blank
Level 1 in Millions
of Pounds
Level 2 in Millions
of Pounds
Level 3 in Millions
of Pounds
Total in Millions
of Pounds
Financial assets: Currency swaps
blank
blank
Financial liabilities: Interest rate swaps
blank
blank
Total
blank
blank
Accounting policies
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 Groups cash management.
Net debt: Net debt comprises cash and cash equivalents, cash deposits net of borrowings, discounted lease liabilities, derivatives hedging securitised
debt and short-term financing for advances to employees. Net debt is presented on a constant currency basis, due to the inclusion of the fixed
exchange rate component of the cross currency swap (as described in note 4.3). Cash flows on the interest rate and cross currency swaps are shown
within interest paid in the Group cash flow statement.
Net debt
Type
2024 in Millions
of Pounds
2023 in Millions
of Pounds
blank
Cash and cash equivalents as presented in the cash flow statement (See Note A in Table Summary)
blank
Derivatives hedging securitised debt (See Note B in Table Summary)
Short-term financing of employee advances (See Note C in Table Summary)
blank
blank
blank
Movement in net debt excluding leases
Category
2024, 52 Weeks
in Millions
of Pounds
2023, 53 Weeks
in Millions
of Pounds
Add back cash flows in respect of other components of net debt: Principal repayments on securitised debt
Add back cash flows in respect of other components of net debt: Principal receipts on cross currency swap
Add back cash flows in respect of other components of net debt: Principal payments on cross currency swap
Add back cash flows in respect of other components of net debt: Short-term financing of employee advances
blank
4.4 Net debt continued
Movement in lease liabilities:
2024
52 weeks
£m
2023
53 weeks
£m
Opening lease liabilities
(463)
(481)
Acquired through business combinations (note 5.1)
(5)
(5)
Additionsa
(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
30 September
2023
£m
Cash flow
movements
in the period
£m
Non-cash
movements
in the period
£m
Foreign
currency
movements
£m
At
28 September
2024
£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 liabilitiesa
(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
24 September
2022
£m
Cash flow
movements
in the period
£m
Non-cash
movements
in the period
£m
Foreign
currency
movements
£m
At
30 September
2023
£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 liabilitiesa
(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.
4.5 Pensions
Accounting policy
Retirement and death benefits have been provided for eligible employees in the United Kingdom principally by the Mitchells & Butlers Pension
Plan (MABPP) and the Mitchells & Butlers Executive Pension Plan (MABEPP). These plans are funded, HMRC approved, occupational pension
schemes with defined contribution (DC) and defined benefit (DB) sections.
In the current period, the defined contribution members within MABEPP were transferred to MABPP. Following this, in September 2024, the
defined benefit liabilities within MABEPP were bought out with Legal & General Assurance Society Limited. This means there are no liabilities
within MABEPP at the year end and so the defined benefit liabilities at the year end relate to the funded MABPP, together with an unfunded
unapproved pension arrangement (the Executive Top-Up Scheme, or MABETUS) in respect of certain individuals who were previously members
of MABEPP. The assets of the plans are held in self-administered trust funds separate from the Company’s assets.
The plans operate under the UK regulatory framework and are governed by Trustee Boards composed of member-nominated and independent
Trustee Directors. The Trustee Directors make investment decisions and set the required contribution rates based on independent actuarial
advice and consultation with the Company.
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.
Actuarial surplus/(liabilities) are the present value of the fair value of the schemes’ assets less the defined benefit obligation. The defined benefit
obligation has been calculated using the projected unit credit method. This is based on a number of financial assumptions and estimates, the
determination of which may be significant to the balance sheet valuation.
A pension surplus is recognised where there is an expectation of future economic benefit to the company. In the current period, 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. 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 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.
There is no current service cost as all defined benefit schemes are closed to future accrual. The net pension finance charge, calculated by applying
the discount rate to the pension deficit or surplus at the beginning of the period, is shown within finance income or expense. The administration
costs of the schemes are recognised within operating costs in the income statement.
Remeasurement comprising actuarial gains and losses, the effect of minimum funding requirements, and the return on schemes’ assets are
recognised immediately in the balance sheet with a charge or credit to the statement of comprehensive income in the period in which they occur.
Curtailments and settlements relating to the Group’s defined benefit plans are recognised in the income statement in the period in which the
curtailment or settlement occurs.
For the defined contribution arrangements, the charge against profit is equal to the amount of contributions payable for that period.
Measurement of scheme assets and liabilities
MABEPP – buy-out
The Trustees of MABEPP bought-out the liabilities of the plan with Legal and General Assurance Society Limited on 20 September 2024, through
converting the overall bulk annuity policy (held by the Trustees as an investment since 2021) into individual policies in members’ own names. As part
of this process, a separate decision was made in August 2024 by the Company to convert the buy-in policy into a buy-out, which was independent of,
and not related to, the initial decision in December 2021 to purchase a buy-in policy.
As a result of the decision to buy-out, which relieves the Company of primary responsibility for the obligation, this event has been treated as a
settlement of an equal and opposite amount on both the assets and liabilities, such that the net impact is a zero cost. Since the buy-out was close
to the Company’s year end, the settlement calculation has been calculated using the year end assumptions (the key assumptions of which are
set out below).
The intention is for MABEPP to be wound-up over the course of the next twelve months.
A £3m cash surplus remaining in MABEPP at the year end has been recognised as it will transfer to MABPP on the wind up of the scheme
and recovered from future DC scheme contributions in line with the MABPP surplus.
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
167
166
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Movement in lease liabilities:
Category
2024, 52 Weeks
in Millions
of Pounds
2023, 53 Weeks
in Millions
of Pounds
Additions (See Note A in Table Summary)
Category
At 30 September
2023
in Millions
of Pounds
Cash flow movements
in
the period
in Millions
of Pounds
Non-cash movements
in
the period
in Millions
of Pounds
Foreign currency
movements
in
Millions of
Pounds
At 28 September
2024
in Millions
of Pounds
blank
blank
Total
blank
blank
blank
blank
blank
blank
blank
Lease liabilities (See Note A in Table Summary)
blank
blank
Category
At 24 September 2022 in
Millions of Pounds
Cash flow movements
in
the period
in Millions
of Pounds
Non-cash movements
in
the period
in Millions
of Pounds
Foreign currency
movements
in
Millions of
Pounds
At 30 September
2023
in Millions
of Pounds
blank
Total
blank
blank
blank
blank
Lease liabilities (See Note A in Table Summary)
blank
blank
Accounting policy: Retirement and death benefits have been provided for eligible employees in the United Kingdom principally by the Mitchells and Butlers
Pension Plan (MABPP) and the Mitchells Butlers Executive Pension Plan (MABEPP). These plans are funded, HMRC approved, occupational
pension schemes with defined contribution (DC) and defined benefit (DB) sections.
In the current period, the defined contribution members within MABEPP were transferred to MABPP. Following this, in September 2024, the defined benefit
liabilities within MABEPP were bought out with Legal and General Assurance Society Limited. This means there are no liabilities within MABEPP
at the year end and so the defined benefit liabilities at the year end relate to the funded MABPP, together with an unfunded unapproved pension
arrangement (the Executive Top-Up Scheme, or MABETUS) in respect of certain individuals who were previously members of MABEPP. The assets
of the plans are held in self-administered trust funds separate from the Companys assets.
In addition, Mitchells and 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.
A pension surplus is recognised where there is an expectation of future economic benefit to the company. In the current period, 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. Since this is a change in the Trustees agreed use of the MABPP surplus compared
to previous years, the accounting surplus is being recognised in full in this years accounts, with the full value of the surplus of 164 Million Pounds 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.
Remeasurement comprising actuarial gains and losses, the effect of minimum funding requirements, and the return on schemes' assets are recognised immediately in the balance sheet with
a charge or credit to the statement of comprehensive income in the period in which they occur.
Curtailments and settlements relating to the Group's defined benefit plans are recognised in the income statement in the period
in which the curtailment or settlement occurs.
Measurement of scheme assets and liabilities
MABEPP - Buy-out: The Trustees of MABEPP bought-out the liabilities of the plan with Legal and General Assurance Society Limited on 20 September 2024,
through converting the overall bulk annuity policy (held by the Trustees as an investment since 2021) into individual policies in members own names.
As part of this process, a separate decision was made in August 2024 by the Company to convert the buy-in policy into a buy-out, which was independent
of, and not related to, the initial decision in December 2021 to purchase a buy-in policy.
A 3 Million Pounds cash surplus remaining in MABEPP at the year end has been recognised as it will transfer to MABPP on the wind up of the scheme
and recovered from future DC scheme contributions in line with the MABPP surplus.
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
years
Executive plan
years
MABETUS
years
Main plan
years
Executive plan
years
MABETUS
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
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.
Sensitivity to changes in actuarial assumptions
The sensitivities regarding principal actuarial assumptions, assessed in isolation, that have been used to measure the scheme liabilities are set out
below. These are considered to be reasonable sensitivities based on the average movement over the last three financial periods. There was no
change in the methods and assumptions used in preparing the sensitivity analysis from the prior period.
2024
Increase/
(decrease)
in actuarial
surplus
2024
£m
0.5% increase in discount rate
2
0.2% increase in inflation rate
(1)
Additional one year decrease to life expectancy
1
2023
Increase/
(decrease)
in actuarial surplus
2023
£m
1.9% increase in discount rate
4
0.3% increase in inflation rate
(2)
Additional one year decrease to life expectancy
–
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the
changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated. In presenting the above sensitivity
analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting
period, which is the same as that applied in calculating the defined benefit obligation liabilities recognised in the statement of financial position.
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
169
168
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
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:
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 3 Million Pounds 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 Trustees agreed use of the MABPP surplus
compared to previous years, the accounting surplus is being recognised in full in this years accounts, with the full value of the surplus of 164 million
Pounds (including the 3 Million Pounds 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.
Category
2024, Main Plan
2024, Executive
plan
2023, Main Plan
2023, Executive
plan
Category
2024, Main plan
in years
2024, Executive
plan
in years
2024, MABETUS
in years
2023, Main
plan in
years
2023, Executive
plan
in years
2023, MABETUS
in
years
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 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 36 Million Pounds 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 12 Million Pounds (2023 47 Million Pounds; 12 Million Pounds in respect of the MABEPP blocked account and 35 Million Pounds 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 139 Million Pounds, which represents 164 Million Pounds
surplus in relation to MABEPP and MABPP, with a liability of 25 Million Pounds relating to MABETUS.
Sensitivity to changes in actuarial assumptions: The sensitivities regarding principal actuarial assumptions, assessed in isolation, that have been used to
measure the scheme liabilities are set out below. These are considered to be reasonable sensitivities based on the average movement over the last three
financial periods. There was no change in the methods and assumptions used in preparing the sensitivity analysis from the prior period.
Year
Category
Increase/ (decrease)
in actuarial
surplus in
Millions of Pounds
2024
2023
1.9% increase in discount rate
4
blank
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.
Amounts recognised in respect of defined benefit schemes
The following amounts relating to the Group’s defined benefit and defined contribution arrangements have been recognised in the Group income
statement and Group statement of comprehensive income.
Group income statement
2024
52 weeks
£m
2023
53 weeks
£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)
Group statement of comprehensive income
2024
52 weeks
£m
2023
53 weeks
£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
Group balance sheet
2024
£m
2023
£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
a. The total net pension asset of £139m (2023 £22m liability) is presented as a pension asset of £164m, made up of a net asset from the two funded plans, and liabilities of £25m
(2023 £22m), presented as a £1m current liability (2023 £1m) and a £24m non-current liability (2023 £21m).
The movement in the fair value of the schemes’ assets in the period is as follows:
Schemes’ assets
2024
£m
2023
£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
Changes in the present value of defined benefit obligation are as follows:
Defined benefit obligation
2024
£m
2023
£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 perioda
(1,099)
(1,313)
a. The defined benefit obligation comprises £25m (2023 £22m) relating to the MABETUS unfunded plan and £1,074m (2023 £1,291m) relating to the funded plans.
The weighted average duration of the defined benefit obligation is 13 years (2023 13 years).
The major categories and fair values of assets of the MABPP and MABEPP schemes at the end of the reporting period are as follows. All assets are
held by the MABPP other than £3m cash in the MABEPP.
2024
£m
2023
£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
The actual investment return achieved on schemes’ assets over the period was a profit of 12.9% (2023 loss of 12.0%), which represented a gain
of £180m (2023 loss of £189m).
Cash and cash equivalents are classified as Level 1 instruments. Forward foreign exchange contracts are classified as Level 2 instruments. Real estate
debt and secured income debt are classified as Level 3 instruments.
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
171
170
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
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.
Amounts recognised in respect of defined benefit schemes: The following amounts relating to the Groups defined benefit and defined contribution arrangements
have been recognised in the Group income statement and Group statement of comprehensive income.
Group
income
statement
Type
2024, 52 weeks
in Millions
of Pounds
2023, 53 weeks
in Millions
of Pounds
Operating
profit:
Employer contributions (defined contribution plans) (note 2.3)
Administrative costs (defined benefit plans)
Finance
costs:
Net pensions finance income on actuarial surplus
Total
charge
2024, 52 weeks in Millions of
Pounds
2023, 53 weeks
in Millions
of Pounds
2024 in Millions
of Pounds
2023 in Millions
of Pounds
Fair value of schemes' assets
Present value of schemes' liabilities
blank
Total pension asset/(liabilities) (See Note A in Table Summary)
The movement in the fair value of the schemes' assets in the period is as follows:
Type
Schemes' assets for 2024 in Millions
of Pounds
Schemes'
assets
for
2023 in
Millions
of
Pounds
Fair value of schemes' assets at beginning of period
Remeasurement gain/(loss): Loss on schemes' assets (excluding amounts included in net
finance charge)
blank
Type
Defined benefit
obligation
for 2024
in Million Pounds
Defined benefit
obligation
for
2023 in Million
Pounds
Remeasurement losses: Effect of changes in demographic assumptions
Remeasurement losses: Effect of changes in financial assumptions
Remeasurement losses: Effect of experience adjustments Settlements
blank
At end of period (See Note A in Table Summary)
The major categories and fair values of assets of the MABPP and MABEPP schemes at the end of the reporting period are as follows. All assets are held
by the MABPP other than 3 Million Pounds cash in the MABEPP.
2024 in Millions
of Pounds
2023 in Millions
of Pounds
Pooled investment funds: Real estate debt
Debt instruments: - Secured income debt
blank
blank
The actual investment return achieved on schemes' assets over the period was a profit of 12.9% (2023 loss of 12.0%), which
represented a gain of 180 Million Pounds (2023 loss of 189 Million Pounds).
4.6 Share-based payments
Accounting policy
The Group operates a number of equity-settled share-based compensation plans, whereby, subject to meeting any relevant conditions,
employees are awarded shares or rights over shares. The cost of such awards is measured at fair value, excluding the effect of non market-based
vesting conditions, on the date of grant. The expense is recognised on a straight-line basis over the vesting period and is adjusted for the estimated
effect of non market-based vesting conditions and forfeitures, on the number of shares that will eventually vest due to employees leaving the
employment of the Group. Fair values are calculated using either the Black-Scholes, Binomial or Monte Carlo simulation models depending
on the conditions attached to the particular share scheme.
Sharesave plan options granted to employees are treated as cancelled when employees cease to contribute to the scheme. This results in an
accelerated recognition of the expense that would have arisen over the remainder of the original vesting period.
Schemes in operation
The net charge recognised for share-based payments in the period was £7m (2023 £5m).
The Group had six equity-settled share schemes (2023 five) in operation during the period: the Performance Share Plan (PSP); the Restricted Share
Plan (RSP); the Performance Restricted Share Plan (PRSP); Sharesave Plan (SAYE); Share Incentive Plan (SIP) and Short Term Deferred Incentive
Plan (STDIP).
The vesting of all awards or options is generally dependent upon participants remaining in the employment of a participating company during the
vesting period. Further details on each scheme are provided in the Report on Directors’ remuneration on pages 92 to 112.
The fair value of awards under the Performance Share Plan, the Restricted Share Plan, the Share Incentive Plan and the Short Term Deferred Incentive
Plan are equal to the share price on the date they are granted as there is no price to be paid and employees are entitled to Dividend Accrued Shares
to the value of ordinary dividends paid or payable during the vesting period. There was no award under the RSP in the current period, as this scheme
has been replaced by the PSP. The fair value of options granted under these schemes is shown below.
Fair value of options granted
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
The following table sets out weighted average information about how the fair value of the Sharesave Plan option grants were calculated.
2024
Sharesave
Plan
2023
Sharesave
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%
Volatilitya
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
a. The expected volatility is determined by calculating the historical volatility of the Company’s share price commensurate with the expected term of the options and share awards.
b. The expected life of the options represents the average length of time between grant date and exercise date.
Scheme movements in the period
The tables below summarise the movements in outstanding options during the period for each scheme.
Number of shares
Weighted average
exercise price
Sharesave Plan
2024
m
2023
m
2024
p
2023
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
–
–
–
–
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
Share Incentive Plan
2024
m
2023
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
Restricted Share Plan
2024
m
2023
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
Performance Share Plan
2024
m
2023
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
Performance Restricted Share Plan
2024
m
2023
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
STDIP
2024
m
2023
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).
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
173
172
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Accounting policy: The Group operates a number of equity-settled share-based compensation plans, whereby, subject to meeting any relevant conditions,
employees are awarded shares or rights over shares. The cost of such awards is measured at fair value, excluding the effect of non market-based
vesting conditions, on the date of grant. The expense is recognised on a straight-line basis over the vesting period and is adjusted for the estimated
effect of non market-based vesting conditions and forfeitures, on the number of shares that will eventually vest due to employees leaving the employment
of the Group. Fair values are calculated using either the Black-Scholes, Binomial or Monte Carlo simulation models depending on the conditions
attached to the particular share scheme.
Schemes in operation: The net charge recognised for share-based payments in
the period was 7 Million Pounds (2023 5 Million Pounds).
Fair value of options granted
Type
282.5p
blank
blank
The following table sets out weighted average information about how the fair value of the Sharesave Plan option grants were calculated.
2024 Sharesave Plan: Black-Scholes
2023 Sharesave
Plan:
Black-Scholes
blank
blank
Volatility (See Note A in Table Summary)
Expected life in years (See Note B in Table Summary)
Scheme movements in the period: The tables below summarise the movements in outstanding
options during the period for each scheme.
Number of shares for
2024 in Millions
Number of shares
for 2023
in Millions
Weighted average
exercise
price
for 2024
in p
Weighted average
exercise
price
for 2023
in p
blank
blank
blank
blank
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
for 2024
in Millions
Number of shares
for 2023
in Millions
Number of shares
for 2024 in
Millions
Number of shares
for 2023
in Millions
blank
blank
blank
blank
blank
Number of shares
for 2024
in Millions
Number of shares
for 2023
in Millions
blank
blank
blank
blank
blank
blank
Number of shares
for 2024 in
Millions
Number of shares
for 2023
in Millions
blank
blank
blank
Number of shares for 2024
in Millions
Number of
shares
for
2023 in
Millions
blank
blank
blank
4.7 Equity
Accounting policies
Own shares
The cost of own shares held in employee share trusts and in treasury are deducted from shareholders’ equity until the shares are cancelled,
reissued or disposed of. Where such shares are subsequently sold or reissued, the fair value of any consideration received is also included
in shareholders’ equity.
Dividends
Dividends proposed by the Board but unpaid at the period end are not recognised in the financial statements until they have been approved
by shareholders at the Annual General Meeting. Interim Dividends are recognised when paid.
Scrip Dividends are fully paid up from the share premium account. They are accounted for as an increase in share capital for the nominal value
of the shares issued, and a resulting reduction in share premium.
2024
2023
Called up share capital
Number of
shares
£m
Number of
shares
£m
Allotted, called up and fully paid
Ordinary shares of 813⁄24p each
At start of period
597,726,859
51
597,383,363
51
Share capital issueda
330,812
–
343,496
–
At end of period
598,057,671
51
597,726,859
51
a. During the period, the Company issued 330,812 (2023 343,496) shares at nominal value under share option schemes, for consideration of £28,257 (2023 £29,340).
All of the ordinary shares rank equally with respect to voting rights and rights to receive Ordinary and Special Dividends. There are no restrictions
on the rights to transfer shares.
Details of options granted under the Group’s share schemes are contained in note 4.6.
Dividends
There were no dividends declared or paid during the current or prior period.
Share premium account
The share premium account represents amounts received in excess of the nominal value of shares on issue of new shares. Share premium of £nil
(2023 £nil) has been recognised on shares issued in the period.
Capital redemption reserve
The capital redemption reserve movement arose on the repurchase and cancellation by the Company of ordinary shares during prior periods.
Revaluation reserve
The revaluation reserve represents the unrealised gain generated on revaluation of the property estate with effect from 29 September 2007.
It comprises the excess of the fair value of the estate over deemed cost, net of related deferred taxation.
Own shares held
Own shares held by the Group represent the shares in the Company held by the employee share trusts.
During the period, the employee share trusts acquired 2,500,000 shares at a cost of £7,137,350 (2023 nil shares at a cost of £nil) and subscribed
for 302,420 shares (2023 339,240) at a cost of £nil (2023 £nil). The employee share trusts released 1,280,727 (2023 195,457) shares to employees
on the exercise of options and other share awards for a total consideration of £2,833,597 (2023 £nil). The 5,512,147 shares held by the trusts
at 28 September 2024 had a market value of £17m (2023 3,990,454 shares held had a market value of £9m).
The Company has established two employee share trusts:
Share Incentive Plan (‘SIP’) Trust
The SIP Trust was established in 2003 to purchase shares on behalf of employees participating in the Company’s Share Incentive Plan. Under this
scheme, eligible employees are awarded free shares which are normally held in trust for a holding period of at least three years. After three years, the
shares may be transferred or sold by the employee but would be subject to income tax and National Insurance contributions. After five years the shares
may be transferred to or sold by the employee free of income tax and National Insurance contributions. The SIP Trust buys the shares in the market
or subscribes for newly issued shares with funds provided by the Company. During the holding period, dividends are paid directly to the participating
employees. At 28 September 2024, the trustees, Equiniti Share Plan Trustees Limited, held 2,285,174 (2023 2,235,495) shares in the Company.
Of these shares, 1,127,251 (2023 1,112,099) shares are available to employees, 1,131,504 (2023 1,112,172) shares have been awarded to employees
but are still required to be held within the SIP Trust until the three year holding period has expired, and the remaining 26,419 (2023 11,224) shares
are unallocated.
Employee Benefit Trust (‘EBT’)
The EBT was established in 2003 in order to satisfy the exercise or vesting of existing and future share options and awards under the Restricted Share
Plan, Performance Restricted Share Plan, Short Term Deferred Incentive Plan and the Sharesave Plan. The EBT purchases shares in the market or
subscribes for newly issued shares, using funds provided by the Company, based on expectations of future requirements. Dividends are waived by the
EBT. At 28 September 2024, the trustees, Apex Group Fiduciary Services Limited, were holding 3,226,973 (2023 1,754,959) shares in the Company.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related
to hedged future cash flows.
Translation reserve
The translation reserve is used to record exchange differences arising from the translation of the consolidated financial statements of foreign subsidiaries.
Retained earnings
The Group’s main operating subsidiary, Mitchells & Butlers Retail Limited, had retained earnings under FRS 101 of £2,384m at 28 September 2024
(2023 £2,227m). Its ability to distribute these reserves by way of dividends is restricted by the securitisation covenants (see note 4.1).
Section 4 – Capital structure and financing costs continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
175
174
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Accounting policies
Own shares: The cost of own shares held in employee share trusts and in treasury are deducted from shareholders equity until the shares are cancelled,
reissued or disposed of. Where such shares are subsequently sold or reissued, the fair value of any consideration received is also included
in shareholders equity.
Dividends: Dividends proposed by the Board but unpaid at the period end are not recognised in the financial statements until they have been approved
by shareholders at the Annual General Meeting. Interim Dividends are recognised when paid.
2024 in Number of Shares
2024 in Million
Pounds
2023 in Number of
Shares
2024 in Million
Pounds
Allotted, called up and fully paid: Ordinary shares of 8 and 13 out of 24 pence
each
blank
blank
blank
blank
Share capital issued (See Note A in table summary)
blank
blank
Dividends: There were no dividends declared or paid during the current
or prior period.
Share premium account: The share premium account represents amounts received in excess of the nominal value of shares on issue of new shares. Share
premium of ﾣnil (2023 ﾣnil) has been recognised on shares issued in the period.
Capital redemption reserve: The capital redemption reserve movement arose on the repurchase and cancellation by the Company
of ordinary shares during prior periods.
Revaluation reserve: The revaluation reserve represents the unrealised gain generated on revaluation of the property estate with effect from 29 September
2007. It comprises the excess of the fair value of the estate over deemed cost, net of related deferred taxation.
Own shares held: Own shares held by the Group represent the shares in the Company held
by the employee share trusts.
During the period, the employee share trusts acquired 2,500,000 shares at a cost of 7,137,350 Pounds (2023 nil shares at a cost of nil Pounds) and subscribed for 302,420 shares (2023, 339,240)
at a cost of nil Pounds (2023 nil Pounds). The employee share trusts released 1,280,727 (2023, 195,457) shares to employees on the exercise of options and other share awards for
a total consideration of 2,833,597 Pounds (2023 nil Pounds). The 5,512,147 shares held by the trusts at 28 September 2024 had a market value of 17 Million Pounds (2023 3,990,454 shares
held had a market value of 9 Million Pounds).
Share Incentive Plan (SIP) Trust: The SIP Trust was established in 2003 to purchase shares on behalf of employees participating in the Companys Share
Incentive Plan. Under this scheme, eligible employees are awarded free shares which are normally held in trust for a holding period of at least three years.
After three years, the shares may be transferred or sold by the employee but would be subject to income tax and National Insurance contributions. After
five years the shares may be transferred to or sold by the employee free of income tax and National Insurance contributions. The SIP Trust buys the shares
in the market or subscribes for newly issued shares with funds provided by the Company. During the holding period, dividends are paid directly to the
participating employees. At 28 September 2024, the trustees, Equiniti Share Plan Trustees Limited, held 2,285,174 (2023 2,235,495) shares in the Company.
Of these shares, 1,127,251 (2023 1,112,099) shares are available to employees, 1,131,504 (2023 1,112,172) shares have been awarded to employees
but are still required to be held within the SIP Trust until the three year holding period has expired, and the remaining 26,419 (2023 11,224) shares
are unallocated.
Employee Benefit Trust (EBT): The EBT was established in 2003 in order to satisfy the exercise or vesting of existing and future share options and awards
under the Restricted Share Plan, Performance Restricted Share Plan, Short Term Deferred Incentive Plan and the Sharesave Plan. The EBT purchases
shares in the market or subscribes for newly issued shares, using funds provided by the Company, based on expectations of future requirements.
Dividends are waived by the EBT. At 28 September 2024, the trustees, Apex Group Fiduciary Services Limited, were holding 3,226,973 (2023
1,754,959) shares in the Company.
Hedging reserve: The hedging reserve comprises the effective portion of the cumulative net change in the
fair value of cash flow hedging instruments related to hedged future cash flows.
Translation reserve: The translation reserve is used to record exchange differences arising from the translation of the consolidated
financial statements of foreign subsidiaries.
Retained earnings: The Groups main operating subsidiary, Mitchells and Butlers Retail Limited, had retained earnings under FRS 101 of 2,384 Million Pounds
at 28 September 2024 (2023 2,227 Million Pounds). Its ability to distribute these reserves by way of dividends is restricted by the securitisation covenants
(see note 4.1).
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.
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).
5.2 Related party transactions
Key management personnel
Employees of the Mitchells & Butlers plc Group who are members of the Board of Directors or the Executive Committee of Mitchells & Butlers plc are
deemed to be key management personnel. It is the Board who have responsibility for planning, directing and controlling the activities of the Group.
Compensation of key management personnel of the Group:
2024
52 weeks
£m
2023
53 weeks
£m
Short-term employee benefits
7
6
Movements in share options held by the Directors of Mitchells & Butlers plc are summarised in the Report on Directors’ remuneration in the
information labelled as audited by KPMG on pages 92 to 108.
Associate companies
The Group held a number of property lease agreements with its associate companies, 3Sixty Restaurants Limited and Fatboy Pub Company Limited.
As disclosed in note 5.1, 3Sixty Restaurants Limited was acquired during the prior period and from 18 April 2023 is treated as a subsidiary under
control of the Group. Disclosures below for 3Sixty Restaurants Limited relate to the period up to 18 April 2023 only.
The Group has entered into the following transactions with the associates:
3Sixty Restaurants Limited
Fatboy Pub Company Limited
2024
52 weeks
£000
2023
53 weeks
£000
2024
52 weeks
£000
2023
53 weeks
£000
Rent charged
–
640
128
100
Sales of goods and services
–
419
12
4
–
1,059
140
104
The balance due from Fatboy Pub Company at 28 September 2024 was £14,000 (2023 £10,000), net of a provision of £nil (2023 £179,000).
Related parties
During the 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.
Section 5 – Other notes
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
177
176
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
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 15 Million Pounds and
has been assessed at 12 Million Pounds 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.
Type
Fair value on
acquisition
in
Millions of Pounds
Consideration: Initial cash consideration
Consideration: Contingent consideration
Consideration: Total consideration
Goodwill of 5 Million Pounds 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.
Contingent consideration of 8 Million Pounds 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 15 Million Pounds. 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 ﾣ8m to revenue and 1 Million Pounds to the Groups 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
20 Million Pounds revenue and 2 Million Pounds to the Groups 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 4 Million Pounds,
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 17 Million Pounds, 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.
Consideration:
Fair value on
acquisition
in
Millions of
Pounds
Cash consideration for purchase of the remaining 60% interest
Less: cash and cash equivalents acquired
Net cash outflow on acquisition
At acquisition, the carrying value of the investment in 3Sixty Restaurants Limited of 7 Million Pounds was revised to fair value of 12 Million Pounds,
with a gain of 5 Million Pounds 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 3 Million Pounds loss recognised as a separately disclosed item within the income statement (see note 2.2).
5.2 Related party transactions
Key management personnel: Employees of the Mitchells and Butlers plc Group who are members of the Board of Directors or the Executive Committee of Mitchells
and Butlers plc are deemed to be key management personnel. It is the Board who have responsibility for planning, directing and controlling the activities
of the Group.
Compensation of key management personnel of the Group:
Type
2024, 52 weeks
in Millions
of Pounds
2023, 53 weeks
in Millions
of Pounds
Associate companies: The Group held a number of property lease agreements with its associate companies, 3Sixty Restaurants Limited and Fatboy Pub Company
Limited. As disclosed in note 5.1, 3Sixty Restaurants Limited was acquired during the prior period and from 18 April 2023 is treated as a subsidiary
under control of the Group. Disclosures below for 3Sixty Restaurants Limited relate to the period up to 18 April 2023 only.
The Group has entered into the following transactions with the associates:
Type
3Sixty Restaurants
Limited:
2024,
52 weeks
in thousand
pounds
3Sixty Restaurants
Limited:
2023,
53 weeks
in thousand
pounds
Fatboy Pub Company
Limited:
2024,
52 weeks
in thousand
pounds
Fatboy Pub Compan
Limited:
2023,
53 weeks
in thousand
pounds
blank
blank
Total
blank
The balance due from Fatboy Pub Company at 28 September 2024 was 14,000 Pounds (2023 10,000 Pounds), net of a provision of nil (2023 179,000 Pounds).
Related parties: During the period, Mitchells and Butlers Retail Limited entered an option arrangement with Tottenham Hotspur Football Co Limited (THFC),
a related party, to sell the companys 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.
5.3 Subsidiaries and associates
Subsidiaries
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
Mitchells & Butlers plc is the ultimate controlling party and the beneficial owner of all of the equity share capital, either itself or through subsidiary
undertakings, of the following companies:
Name of subsidiary
Country of
incorporation
Registration
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 GmbHac
Germany
Service company
Mitchells & Butlers Finance plc
England and Wales
04778667
Finance company
Other subsidiaries
Mitchells & Butlers (Property) Limitedb
England and Wales
01299745
Property management
Standard Commercial Property Developments Limitedb
England and Wales
00056525
Property development
Mitchells & Butlers Holdings (No.2) Limiteda,b
England and Wales
06475790
Holding company
Mitchells & Butlers Holdings Limitedb
England and Wales
03420338
Holding company
Mitchells & Butlers Leisure Holdings Limitedb
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) Limitedb
England and Wales
04885717
Dormant
Mitchells & Butlers Retail Property Limiteda,b
England and Wales
06301758
Non-trading
Mitchells and Butlers Healthcare Trustee Limitedb
England and Wales
04659443
Healthcare trustee
ALEX Gaststätten Immobiliengesellschaft mbHc
Germany
Property management
ALL BAR ONE Gaststätten Betriebsgesellschaft mbHc
Germany
Leisure retailing
ALEX Alsterpavillon Immobilien GmbH & Co KGc
Germany
Property management
ALEX Alsterpavillon Management GmbHc
Germany
Management company
ALEX Gaststätten Management GmbHc
Germany
Management company
Miller & Carter Gaststätten Betriebsgesellschaft mbHc
Germany
Leisure retailing
Browns Restaurant (Brighton) Limitedd
England and Wales
01564302
Dormant
Browns Restaurant (Bristol) Limitedd
England and Wales
02351724
Dormant
Browns Restaurant (Cambridge) Limitedd
England and Wales
01237917
Dormant
Browns Restaurant (London) Limitedd
England and Wales
00291996
Dormant
Browns Restaurant (Oxford) Limitedd
England and Wales
01730727
Dormant
Browns Restaurants Limitedd
England and Wales
01001320
Dormant
Lander & Cook Limitedd
England and Wales
11160005
Dormant
3Sixty Restaurants Limitede
England and Wales
07540663
Holding company
a. Shares held directly by Mitchells & Butlers plc.
b. These 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.
c. The German subsidiary companies are consolidated on the basis of their reporting period, being the year ending 30 September 2024 (2023 30 September 2023).
d. These 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.
e. 3Sixty Restaurants Limited ceased trading during the year following the hive-up of its business and assets to Mitchells & Butlers Retail (No. 2) Limited, its parent company.
All companies registered in England and Wales operate within the United Kingdom. The registered office for these companies is 27 Fleet Street,
Birmingham, B3 1JP.
All companies registered in Germany operate solely within Germany. The registered office for these companies is Adolfstrasse 16, 65185 Wiesbaden.
Associates
Details of the Company’s associates, held indirectly, are as follows:
Name of associate
Registered office
Country of
incorporation and
operation
Country of operation
Nature of business
Proportion of
ownership
interest %
Proportion of voting
power interest %
Fatboy Pub
Company Limited
Ampney House, Falcon Close,
Quedgeley, Gloucester, GL2 4LS
England and
Wales
United Kingdom
Leisure retailing
25
25
Section 5 – Other notes continued
Notes to the consolidated financial statements continued
Strategic Report
Governance
Other Information
Introduction
Mitchells & Butlers plc Annual Report and Accounts 2024
179
178
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
5.3 Subsidiaries and associates
Subsidiaries: Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
Name
of
Category
Principal
operating
subsidiaries
Mitchells & Butlers Retail Limited
blank
Mitchells & Butlers Germany GmbH (See Notes A and C in the
Table Summary)
blank
Other
subsidiaries
Mitchells & Butlers (Property) Limited (See Note B in the table
summary)
Standard Commercial Property Developments Limited (See Note
B in the table summary)
Mitchells & Butlers Holdings (No.2) Limited (See Notes A and B
in the Table Summary)
Mitchells & Butlers Holdings Limited (See Note B in the table summary)
Mitchells & Butlers Leisure Holdings Limited (See Note B in the
table summary)
Mitchells & Butlers (IP) Limited (See Note B in the table summary)
Mitchells & Butlers Retail Property Limited (See Notes A and B
in the Table Summary)
Mitchells and Butlers Healthcare Trustee Limited (See Note B
in the table summary)
ALEX Gastst￤tten Immobiliengesellschaft mbH (See Note C in
the table summary)
blank
ALL BAR ONE Gastst￤tten Betriebsgesellschaft mbH (See Note
C in the table summary)
blank
ALEX Alsterpavillon Immobilien GmbH & Co KG (See Note C in
the table summary)
blank
ALEX Alsterpavillon Management GmbH (See Note C in the table
summary)
blank
ALEX Gastst￤tten Management GmbH (See Note C in the table
summary)
blank
Miller & Carter Gastst￤tten Betriebsgesellschaft mbH (See Note
C in the table summary)
blank
Browns Restaurant (Brighton) Limited (See Note D in the table
summary)
Browns Restaurant (Bristol) Limited (See Note D in the table summary)
Browns Restaurant (Cambridge) Limited (See Note D in the table
summary)
Browns Restaurant (London) Limited (See Note D in the table
summary)
Browns Restaurant (Oxford) Limited (See Note D in the table summary)
Browns Restaurants Limited (See Note D in the table summary)
Lander & Cook Limited (See Note D in the table summary)
3Sixty Restaurants Limited (See Note E in the table summary)
Associates: Details of the Companys associates, held indirectly,
are as follows:
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
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
180
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Company balance sheet
28 September 2024
Category
Type
2024 in Millions
of Pounds
2023 in Millions
of
Pounds
Non-current
assets
blank
blank
Total
blank
Current
assets
blank
Total
blank
Current
liabilities
Total
blank
Non-current
liabilities
blank
Total
blank
Net
Assets
blank
Equity
blank
blank
blank
The Company reported a loss for the 52 weeks ended 28 September 2024 of 16 Million Pounds (53 weeks ended 30 September 2023 loss of 16 Million Pounds).
Tim Jones, Chief Financial
Officer
Company statement of changes in equity
For the 52 weeks ended 28 September 2024
Type
Share capital
in Millions
of Pounds
Share premium
in Millions
of Pounds
Capital redemption
reserve
in Millions
of Pounds
Own shares
held in
Millions of
Pounds
Retained earnings
in Millions
of Pounds
Total equity in
Millions of Pounds
At 24 September 2022
51
357
3
(5)
1,744
2,150
Loss after taxation
blank
blank
blank
blank
(16)
(16)
Remeasurement of pension liability
blank
blank
blank
blank
42
42
Deferred tax on remeasurement of pension liability
blank
blank
blank
blank
(9)
(9)
Total comprehensive income
blank
blank
blank
blank
17
17
Credit in respect of employee share schemes
blank
blank
blank
blank
5
5
At 30 September 2023
51
357
3
(5)
1,766
2,172
Loss after taxation
blank
blank
blank
blank
(16)
(16)
Remeasurement of pension liability
blank
blank
blank
blank
166
166
Deferred tax on remeasurement of pension liability
blank
blank
blank
blank
(42)
(42)
Total comprehensive income
blank
blank
blank
blank
108
108
Purchase of own shares
blank
blank
blank
(7)
blank
(7)
Release of own shares
blank
blank
blank
3
(3)
blank
Credit in respect of employee share schemes
blank
blank
blank
blank
7
7
At 28 September 2024
51
357
3
(9)
1,878
2,280
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
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
Additionsa
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
182
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
Notes to the Mitchells and Butlers plc Company
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.
Share options and share awards are granted to employees of the Mitchells and 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 Companys 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 16 Million Pounds (2023 loss of 16 Million Pounds), less dividends of nil Pounds (2023 nil Pounds).
Audit remuneration
Auditors remuneration for audit services to the Company was 30,000 Pounds (2023 ﾣ30,000). 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
Role
2024, 52 weeks
2023, 53 weeks
Employees of Mitchells and Butlers plc consist of Executive Directors who are considered to be the key management personnel of the Company.
The charge recognised for share-based payments in the period is 2 Million Pounds (2023 1 Million Pounds).
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 Companys pension liability was 25 Million Pounds (2023 22 Million Pounds). Of this amount, 1 Million Pounds (2023 1 Million
Pounds) is a current liability and 24 Million Pounds (2023, 21 Million Pounds) is a non-current liability.
At 28 September 2024 the Companys pension surplus was 164 Million Pounds (2023 nil Pounds).
5. Investments in subsidiaries
Accounting policy
The Companys 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.
Category
Type
Investments in
subsidiary undertaking
in
Millions of Pounds
Cost
At 24 September 2022
blank
Additions (See Note A in the Table Summary)
Provision
At 24 September 2022
blank
blank
Net
book
value
At 28 September 2024
Mitchells and 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.
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 accountsa
–
47
384
430
2024
£m
2023
£m
Current
Amounts owed by subsidiary undertakings
192
204
Defined benefit pension blocked accountsa
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 undertakingsa
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.
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 lossesa
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
184
Annual Report and Accounts 2024 Mitchells & Butlers plc
Financial Statements
Financial Statements
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%).
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 Financial Year 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
Category
Type
2024 in Millions
of Pounds
2023 in Millions
of
Pounds
Non-current
Defined benefit pension blocked accounts (See note A in the table summary)
blank
Total
384
430
Current
Defined benefit pension blocked accounts (See note A in the table summary)
blank
Total
Amounts owed by subsidiary undertakings are repayable on demand. However, 384 Million Pounds (2023, 383 Million Pounds) 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.
7. Trade and other payables Current
Current
Type
2024 in Millions
of Pounds
2023 in Millions
of Pounds
Amounts owed to subsidiary undertakings (See Note A in the Table Summary)
blank
Total
8. Borrowings
Accounting policy
The accounting policy for borrowings is disclosed in the consolidated financial statements in note 4.1.
2024 in Millions
of Pounds
2023 in Millions
of
Pounds
Unsecured revolving credit facility
The Company holds an uncommitted gross overdraft facility of 50 Million Pounds (2023 50 Million Pounds) as part of the Groups notional pooling arrangements with a net facility limit of 5 Million
Pounds (2023, 5 Million Pounds) across the participating Group companies. The amount drawn at 28 September 2024 is 4 Million Pounds (2023, 23 Million Pounds).
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:
Type
In Millions of Pounds
Charged to other comprehensive income - pensions
Charged to income statement - tax losses
blank
Credited to income statement - pensions
Charged to other comprehensive income - pensions
Category
2024 in Million Pounds
2023 in Million
Pounds
Tax losses (See Note A in Table Summary)
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.
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
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
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Financial Statements
Introduction
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Other Information
Other Information
Other Information
Financial Year 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. Financial Year 2024 was a 52-week year.
Financial Year 2023 52-week reconciliation
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.
Category
2024 in Millions of Pounds2023 in Millions
of Pounds
Year-on-year
in
%
blank
blank
blank
blank
Drink Sales
Type
2024 in Millions of Pounds
2024 in Millions
of Pounds
Year-on-year
in
%
blank
blank
blank
blank
blank
Type
2024 in Millions of Pounds
2023 in Millions
of Pounds
Year-on-year
in
%
blank
blank
blank
blank
blank
Other Sales
Type
2024 in Millions of Pounds
2023 in Millions
of Pounds
Year-on-year
in
%
blank
blank
blank
blank
blank
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 Groups trading performance from one period to the
next.
Type
2024 in Millions of Pounds2023 in Millions
of Pounds
Year-on-year
in
%
blank
blank
blank
blank
blank
blank
blank
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
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 acquisitionsa
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.
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Financial Statements
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Annual Report and Accounts 2024 Mitchells & Butlers plc
Other Information
Other Information
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 Groups trading performance from one period to the next.
Type
2024 in Millions of Pounds2023 in Millions
of Pounds
Year-on-year
in
%
blank
blank
blank
blank
blank
blank
blank
blank
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 Financial Year 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.
Type
2024 in Millions of Pounds
2023 in Millions
of Pounds
Year-on-year
in
%
blank
blank
blank
blank
blank
E. FY 2023 52-week reconciliation
A 53-week accounting period occurs every five years. Financial Year 2023 was a 53-week period and therefore presentation of a 52-week basis provides useful
comparability to previous financial years.
Type
Source
2023, 52 weeks
2023, Week
53
2023, 53 weeks
Revenue
Income statement
2,459 Million
Pounds
44 Million Pounds
2,503 Million Pounds
Adjusted EBITDA
Income statement
352 Million Pounds
7 Million Pounds
359 Million Pounds
Adjusted operating profit
Income statement
221 Million Pounds
5 Million Pounds
226 Million Pounds
Adjusted PBT
Income statement
112 Million Pounds
3 Million Pounds
115 Million Pounds
Adjusted profit for the period
Income statement
93 Million Pounds
3 Million Pounds
96 Million Pounds
Adjusted EPS
Income statement
15.6p
0.5p
16.1p
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
Type
2023, Financial
Year
2020 to
2023 in Millions
of Pounds
2024, Financial
Year
2021 to
2023 in Millions
of Pounds
2024, Financial
Year 2024
in Millions
of Pounds
2024, Total
in Millions
of
Pounds
blank
blank
blank
blank
Conversions and acquisitions (See Note A in the
Table Summary)
blank
blank
blank
blank
blank
blank
blank
blank
Shareholder information
Mitchells & Butlers online
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
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Other 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 (Lines are open
8.30am to 5.30pm (UK time), Monday to
Friday, excluding public holidays in England
and Wales.)
Key dates
These dates are indicative only and may be subject to change.
Mitchells and Butlers online
Mitchells and Butlers' comprehensive website
gives you fast, direct access to a wide
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Design and production: Gather. Printed by: Park Communications
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Mitchells & Butlers plc
27 Fleet Street
Birmingham B3 1JP
Tel: +44 (0)121 498 4000
Company Number: 4551498
Mitchells and Butlers plc
27 Fleet Street, Birmingham, B3
1JP. Tel: +44 (0)121 498 4000