9th Apr 2008 07:01
Mitchells & Butlers PLC09 April 2008 9 April 2008 Mitchells & Butlers plc Half Year Pre-Close Trading Update Highlights - Resilient sales growth: same outlet like-for-like sales up 0.6% in the first 27 weeks* - Significant market share gains: same outlet food sales up 4.8%; drink declines limited to 1.4% - Robust operating profits performance with productivity and efficiency gains offsetting increasing cost pressures - Strong operational cash inflows - Strategic review continues with conclusions to be announced by Interim Results on 20 May Current Trading - 27 weeks ended 5 April 2008 Mitchells & Butlers reports resilient sales growth and robust operating profitsperformance, together with strong operational cash generation for the first 27weeks. This has been achieved amidst challenging trading conditions for beersales but increased eating out demand in pubs following the smoking ban. Same outlet like-for-like sales were up 0.6% in the first 27 weeks. Food saleshave been buoyant and now account for 38% of sales with same outletlike-for-like sales growth up 4.8%. The smoking ban has widened the appeal ofthe pub, especially to consumers who previously did not eat out in pubs due totobacco smoke. The quality and value of our food offers together with our highstandards of amenity have enabled us to gain a disproportionate share of thisgrowth. As a result, we have further extended our leadership of the on-tradeeating out market, serving over 110 million meals on an annualised basis. Indrinks, we have held same outlet like-for-like drinks sales to a decline of 1.4%representing a further substantial gain in drinks market share relative to thefall in on-trade beer market volumes of 9%**. Good growth has been generated insales of soft drinks and wine as a result of the food sales uplifts. Same outlet like-for-like sales in our pubs in residential areas are up 0.8%with a particularly strong performance from our Pub Restaurant brands, whichhave benefited from the successful appeal of the new menus launched in theautumn. Food sales growth in Locals Pubs has been up 9.3%, although drinks saleshave seen some negative impact from the smoking ban over the winter months. In the High Street, same outlet like-for-like sales have grown 0.5% with stronggrowth in Central London, a good performance from our High Street pubs in therest of the UK, but significant pressure on our late night venues. Current trading in our Scottish estate in the second year of the smoking ban isshowing good growth with same outlet like-for-like sales up 3.5% in the 27 weeksof this financial year. This increase has been generated by significant foodgrowth, up 7.1% combined with a positive drink sales performance up 1.8%. The Acquired Sites' conversion programme has been rapidly implemented and isnearing completion with 196 sites converted to our brands and formats. Takinginto account conversions to our franchise model and disposals, there remain only7 sites to be converted. Initial, post-conversion average weekly sales upliftsare running at 19% above the levels at which the sites were acquired. We will becontinuing to develop the trading performance of these high quality sites inorder to deliver our three year target of 30% sales uplifts by the end of the2009 financial year. Operating Performance Our actions to reduce fixed and variable operating costs have been successfullyimplemented to offset the increasing cost pressures this year. Staffproductivity gains have been very strong, reflecting service traininginitiatives and the benefits of enhanced scheduling systems. Furthermore, thecontinuing food volume growth generated by our sales strategy is drivingsignificant purchasing gains which are mitigating food cost inflation that willimpact particularly in the second half. Cash Flow As previously stated on 29 January, net pre-exceptional financing costs will behigher in the first half compared to last year, however operating cash inflowscontinue to be strong as a result of the robust operating performance. We havealso continued proactively to manage the asset base, taking advantage of thecontinuing strength of the market for quality sites with over £50m of proceedsraised during the first half on EBITDA multiples of approximately 18 times. Consequently net debt has reduced from £2.9bn to approximately £2.8bn since theclosure of the hedges and we anticipate further strong cash inflows in thesecond half as a result of summer trading and the completion of the AcquiredSites' conversion programme. Outlook The quality of our estate, the consumer appeal of our formats and the value andvolume sales strategy have led to accelerated market share gains in both foodand drinks. Continuous improvements in productivity, cost flexibility andfurther efficiency gains are demonstrating the resilience of the operating modelamidst the challenges of the smoking ban and pressures on discretionary consumerexpenditure. The outlook for consumer confidence remains weak while the on-trade beer marketis likely to remain depressed with a continuing shift to the off-trade. Thiswill be exacerbated by the recent budget duty increases. However beer nowrepresents only 25% of our sales and we remain confident in the growth prospectsof our value for money food offers, continuing strong drinks market share gainsand further productivity improvements. We expect these factors to underpin aresilient operating performance for the year as a whole. The strategic review announced in January remains on schedule and we willannounce the conclusions by the time of our Interim Results on 20 May. * The 27 week period includes the two Easter trading weeks in 2008 and one weekof the comparable Easter period last year. This has resulted in a smallfavourable benefit to like-for-like sales arising despite this year's poorweather over the holiday period.** Industry data from October 2007 to February 2008 Appendix: Like-for-like sales 27 weeks ended 5 Same outlet like-for-like Uninvested like-for-likeApril 2008 sales growth sales growthResidential 0.8% (1.5)%High Street 0.5% 0.2%Total 0.6% (1.1)% Note: These results include the Acquired Sites For further information, please contact: Investor Relations:Erik Castenskiold 0121 498 6513 Media:Kathryn Holland 0121 498 4526James Murgatroyd (Finsbury Group) 0207 251 3801 There will be a conference call for analysts and investors at 9.00am; pleasedial +44(0) 20 7162 0025. The replay will be available until 18 April 2008 on+44(0) 20 7031 4064, passcode 791871. Notes for editors: - Mitchells & Butlers owns and operates around 2,000 high quality pubs in prime locations nationwide. The Group's predominantly freehold, managed estate is biased towards large pubs in residential locations. With around 3% of the pubs in the UK, Mitchells & Butlers has 10% of industry sales and average weekly sales per pub over three times greater than that of the average UK pub. - Mitchells & Butlers' leading portfolio of brands and formats includes Ember Inns, Harvester, Sizzling Pub Co., Toby Carvery, Vintage Inns, All Bar One, O'Neill's, Nicholson's and Browns. In addition, Mitchells & Butlers operates a large number of individual city centre and residential pubs. - The "Acquired Sites" are the pub restaurant sites purchased from Whitbread plc in July 2006. - Same outlet like-for-like sales include the sales performance for the comparable period in the prior year of all managed pubs that were trading for the two periods being compared. For the 27 weeks to 5 April 92% of the estate is included in this measure. - Uninvested like-for-like sales include the sales performance for the comparable period in the prior year of those managed pubs that have not received expansionary investment of more than £30,000 in the two periods being compared. For the 27 weeks to 5 April 80% of the estate is included in this measure. Citigroup Global Markets Limited ("Citi") which is authorised and regulated inthe United Kingdom by the Financial Services Authority, is acting for Mitchells& Butlers and no one else in connection with this announcement and will not beresponsible to anyone other than Mitchells & Butlers for providing theprotections afforded to clients of Citi or for providing advice in relation tothe contents of this announcement, or for any other transaction, arrangement ormatters referred to in this announcement. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if anyperson is, or becomes, "interested" (directly or indirectly) in 1% or more ofany class of "relevant securities" of Mitchells & Butlers, all "dealings" in any"relevant securities" of that company (including by means of an option inrespect of, or a derivative referenced to, any such "relevant securities") mustbe publicly disclosed by no later than 3.30 pm (London time) on the Londonbusiness day following the date of the relevant transaction. This requirementwill continue until the date on which the offer becomes, or is declared,unconditional as to acceptances, lapses or is otherwise withdrawn or on whichthe "offer period" otherwise ends. If two or more persons act together pursuantto an agreement or understanding, whether formal or informal, to acquire an"interest" in "relevant securities" of Mitchells & Butlers, they will be deemedto be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Mitchells & Butlers by the offeror or Mitchells & Butlers, or byany of their respective "associates", must be disclosed by no later than 12.00noon (London time) on the London business day following the date of the relevanttransaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Takeover Panel's website atwww.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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