www.mbplc.com Annual Report and Accounts 2 0 15 Mitchells & Butlers plc Mitchells & Butlers plc Annual Report and Accounts 2015 Revenue £2,101m +6.6% Contents Strategic report Financial statements 2 Chairman’s statement 71 Independent auditor’s report to the 3 2015 Highlights members of Mitchells & Butlers plc 4 Mitchells & Butlers at a glance 74 Group income statement 6 Chief Executive’s statement 75 Group statement of comprehensive income 8 Our market 76 Group balance sheet 10 Delivering for our customers 77 Group statement of changes 14 Our business model in equity 16 Our strategy 78 Group cash flow statement 18 Risks and uncertainties 79 Notes to the financial statements 22 Key performance indicators 108 Five year review 24 Business review 109 Mitchells & Butlers plc Company 26 Corporate social responsibility financial statements 31 Financial review 110 Notes to the Mitchells & Butlers plc Company financial statements Governance 35 Chairman’s introduction Shareholder information to Governance 116 Shareholder information 36 Board of Directors 116 Glossary 38 Directors’ report 42 Directors’ responsibilities statement 43 Corporate governance statement 49 Audit Committee report 52 Report on Directors’ remuneration Adjusted earnings per share* 35.7p +9.5% Adjusted operating profit* £328m +4.8% * Adjusted figures refer to results before exceptional items as noted in the Group income statement. 1 Mitchells & Butlers plc Annual Report and Accounts 2015 Mitchells & Butlers plc is a member Strategic of the FTSE 250 and runs some of the report 2–33 UK’s best-loved restaurant and pub brands including All Bar One, Harvester, Toby Carvery, Browns, Vintage Inns and Sizzling Pubs. Our vision is to run businesses that guests love to eat and drink in, and as a result grow shareholder value. Governance 34–69 Our strategy to achieve this vision has five key elements: • Focus the business on the most attractive market spaces within eating and drinking-out • Develop superior brand propositions with high levels of consumer relevance Financial • Recruit, retain and develop engaged statements 70–115 people who deliver excellent service for our guests • Generate high returns on investment through scale advantage • Maintain a sound financial base Shareholder information 116 Go online: www.mbplc.com What you’ll find: • About us and our brands • News from around the business • Corporate social responsibility • Investor relations • Careers with us 2 Mitchells & Butlers plc Annual Report and Accounts 2015 Chairman’s statement I wrote a year ago that our market remains challenging and competitive; this has continued with new supply coming into the The market in which market and consumer expectations evermore demanding. We are also expecting further cost inflation as a result of the introduction we operate remains of the living wage from April 2016. These challenges mean we need to remain on top of our game, and continue to make the most of challenging and the outstanding assets we have in our estate. Against this backdrop, I’m delighted that we competitive. are able to report adjusted EPS growth of 9.5% in the year. We’ve achieved this while making good progress operationally, with the integration of Orchid continuing, the completion of the pub systems project, further single site acquisitions in the UK and Germany, and growing further our like-for-like estate. The resumption of a dividend is a further acknowledgement of the improvement in the Company’s financial position over recent years as well as the Board’s confidence in the future prospects for the business. This, together with the agreement reached with the pension trustees as a part of the 2013 triennial settlement, means that the Directors are recommending the payment of a dividend of 5p per share, with a progressive policy going forward based on the performance of the business. Bob Ivell Chairman 3 Mitchells & Butlers plc Annual Report and Accounts 2015 I was delighted to end the year with the Strategic announcement of Phil Urban’s appointment as our new Chief Executive. Phil brings a 2015 highlights report 2–33 wealth of experience from the wider leisure sector, has a strong track record of delivery Operational highlights and has had a significant impact on the business since joining as Chief Operating Officer in January. We welcome Phil to the Board and look forward to working with him to take the business forward. Number of managed sites I would also like to thank Alistair Darby for 2,000 his significant contribution to the business in his three years as Chief Executive. We wish 1,775 1,779 him all the best for the future. 1,779 1,600 1,576 1,589 FY 2015 (at year end) 1,536 Also on the Board, we appointed Stewart Governance 34–69 Gilliland as Senior Independent Director in February 2015, continuing the strong progress 1,200 we have shown in this area in recent years. Since the year end Piedmont Inc. has nominated Josh Levy as one of its two non-independent 800 representative Board Directors, replacing Douglas McMahon. Josh was therefore appointed to the Board on 13 November, 400 and will stand for reappointment at the Annual General Meeting in January. I would like to welcome Josh to the Board and thank 0 Douglas for his contribution. I remain very FY FY FY FY FY pleased with the makeup of the Board and 2011 2012 2013 2014 2015 how we continue to work together to drive the business forward. Average weekly sales per pub* £k Financial 25 As ever in this industry, our business is 22.8 22.9 23.2 driven by the hard work and commitment 22.6* 22.2 statements 70–115 of our employees, and I would like to thank £22.6k them all on behalf of the Board for their FY 2015 20 continued efforts. It is our team of dedicated and passionate people who work hard to delight our guests and ultimately enable 15 us to grow shareholder value. We look forward to delivering further 10 progress in the year ahead. Bob Ivell 5 Chairman Shareholder 0 * FY 2015 includes the pubs acquired from FY FY FY FY FY the Orchid Group in June 2014. 2011 2012 2013 2014 2015 Food sales as % of total sales % information 116 51% 100 FY 2015 80 60 51 51 51 48 50 40 20 0 FY FY FY FY FY 2011 2012 2013 2014 2015 4 Mitchells & Butlers plc Annual Report and Accounts 2015 Mitchells & Butlers at a glance We love building innovative A brand for brands and formats and run some of the country’s best-known every occasion. restaurants and pubs. So whether you’re in the mood for an unlimited hearty breakfast with your family close to home, or a pint and some tapas in a buzzing city centre restaurant, we’ve a brand for every occasion. Revenue by region (FY 2015) % of sales Harvester A welcoming place for families to spend time together, have fun and share the pleasure of good, honest food. Enjoy our unlimited breakfast, free unlimited salad and fresh, Scotland North East tasty grilled meat and fish. 4% 3% 227 North West Yorkshire/Humberside sites 10% 8% West Midlands East Midlands 14% 5% Ember Inns Relaxed and welcoming suburban pubs, Wales East of England where conversation flows. We serve the best cask ales and classic pub food with a twist in 4% 7% stylish environments. South West Total London 7% 23% 144 sites South East (ex. London) 15% 5 Mitchells & Butlers plc Annual Report and Accounts 2015 Strategic Toby Carvery ALEX Nicholson’s The home of the roast! Every day, your local If you’re out in a German city centre, these If you share our passion for real ale, hearty report 2–33 Toby Carvery lays on a family-sized feast of classic bars and brasseries are the perfect food and a friendly welcome, you’ll feel right at tender, slow-cooked meats, eight lots of places to stop for a beer and a bite to eat. home at these traditional city and town centre vegetables including crispy, ruffled roasties Soak up the sun in the outside eating area pubs. Enjoy the timeless atmosphere that’s and all the trimmings. You’ll find lots more on and try the classic meals, salads and healthy been loved by groups of friends, colleagues offer, such as tasty specials, all-you-can-eat snacks that have made ALEX one of and shoppers since our first pub opened breakfasts and even comfy accommodation Germany’s leading brands. in 1873. at some of our restaurants. 171 43 80 sites sites sites Governance 34–69 All Bar One Castle Browns At All Bar One, we’ve been running stylish city If you like your pint served with real personality, Since the first Browns opened in 1973, it’s been bars in central locations since 1994. Whether pull up a chair in one of our eclectic urban pubs providing delicious food and drink with superb you want to catch up over cocktails, share a serving the best draught beer and great pub service in beautiful surroundings with many bottle of well-chosen wine or enjoy an excellent food. Each is decidedly individual, with a located in unique landmark buildings. meal out, you’ll find something, and somewhere, character to suit its community and an to suit you. independence that attracts regulars as diverse and discerning as the beers on tap. Financial 51 115 25 statements 70–115 sites sites sites Shareholder Miller & Carter Heartland Country Pubs You will not experience a better steak than A collection of the UK’s friendliest pubs We are proud to manage over 300 of the best that at Miller & Carter.