Mitchells & Butlers PLC Annual Report 2016 (9681R)
15 December 2016 - 11:00PM
UK Regulatory
TIDMMAB
RNS Number : 9681R
Mitchells & Butlers PLC
15 December 2016
15 December 2016
MITCHELLS & BUTLERS PLC
Annual Report 2016
In compliance with Listing Rule 9.6.1, Mitchells & Butlers
plc has today submitted copies of the following documents to the
National Storage Mechanism:
1. Company Annual Report and
Accounts 2016
2. Notice of the 2017 Annual
General Meeting
These documents will shortly be available for inspection at
http://www.morningstar.co.uk/uk/NSM
The above documents can also be accessed on the Company's
website at: www.mbplc.com
The Company's Annual General Meeting will be held at Mitchells
& Butlers plc, Retail Support Centre, 27 Fleet Street,
Birmingham, B3 1JP on Tuesday 24 January 2017 at 2.00pm.
A condensed set of Mitchells & Butlers plc financial
statements, information on important events that have occurred
during the year and their impact on the financial statements and
responsibility statements were included in the Company's Full Year
Results announcement on 22 November 2016. That information,
together with the information on Risks and Uncertainties given
below, constitutes the requirements of DGTR 6.3.5 which is to be
communicated via an RIS in unedited full text. This announcement is
not a substitute for reading the full Annual Report and financial
statements. To view the Full Year Results announcement, visit the
Company website: www.mbplc.com/investors/
Risks and uncertainties
This section highlights the principal risks and uncertainties
that affect the Company, 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 Company faces,
but focuses on those that are currently considered to be most
relevant at the current time.
The processes that are used to identify and manage risks are
described in the internal control and risk management statement on
pages 52 and 53 of the 2016 Annual Report.
Risk category and Controls/mitigating activities
description
------------------------------ ---------------------------------------
Market risks
-----------------------------------------------------------------------
Declining sales performance Right team and structure
This risk falls into in place. Brand alignment
three main categories: ensures the right research
Sales: There is a gets done and is acted on.
risk that declining Daily, weekly and periodic
sales may adversely sales reporting, monitoring
affect our market and scrutiny activity is
share and profitability, in place.
reducing headroom Our Eat Drink Share panel
against securitisation provides robust, quick and
tests. cost effective research.
Consumer and market This is our own panel of
insight: 27,000 M&B guests whom we
If M&B fails to manage can use for research purposes
and develop its existing for quick and cost-effective
(and new) brands in insights.
line with consumer Primary research in partnership
needs and market trends with brand/category teams.
due to failure to Working with suppliers to
obtain or use sufficient tap into their research.
insight in a timely Each brand has its own pricing
manner, this may lead strategy.
to a decline in revenues Price promotions are in
and profits. line with the agreed strategy.
Pricing and market Sales training for Management.
changes: Consumer/insight led innovation
If price changes process and development
are not intelligently for new brands.
applied due to a lack Reduce customer complaints
of appreciation of by improving the local management
market sensitivities of social media responses
and elasticities, (ie TripAdvisor).
this may result in Increased digital marketing
decreased revenue activity.
and profit. 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 Company's brands
is maintained.
------------------------------ ---------------------------------------
Cost of goods price Overall, price increases
increases are mitigated as Mitchells
This risk falls into & Butlers leverages its
three main categories: scale to drive competitive
Food: The price of cost advantage and collaborates
goods increases due with suppliers to increase
to increases in demand efficiencies in the supply
and uncertainty of chain. The fragmented nature
supply, leading to of the food supply industry
decreased profits. on the world commodity markets
Drinks: The price gives the Company the opportunity
of drinks goods increases to source products from
due to changes in a number of alternative
demand, legislation, suppliers in order to drive
exchange rates and down cost. Key mitigating
production costs, activities for food and
leading to decreased drink are detailed below:
profits. Food:
Goods not for resale: A Food Procurement Strategy
Increases in the price is in place.
of goods not for resale Full reviews have been carried
and utilities costs out on key categories to
as a result of increases ensure optimum value is
in global demand and achieved in each category.
uncertainty of supply A full range review was
in producing nations completed in early 2015
can have a significant ensuring the correct number
impact on the cost of products/suppliers.
base, consequently Regular reporting of current
impacting margins. and projected inflation.
Good relationships with
key suppliers.
Drinks:
Each drinks category has
a clearly defined strategic
sourcing plan to ensure
company scale is leveraged,
supply base is rationalised
and consumer needs are met.
Good relationships with
key suppliers.
Supplier collaboration programmes
are in place.
Plans in development to
mitigate Sugar Tax.
Risk is increasing mainly
due to the devaluation of
sterling following Brexit,
changes in Government (raising
risk of punitive duty changes)
and the introduction of
the Sugar Tax in 2018.
------------------------------ ---------------------------------------
Operational risks
-----------------------------------------------------------------------
People planning and The Company makes significant
development investment in training to
Mitchells & Butlers ensure that its people have
has a strong guest the right skills to perform
focus, and as such their jobs successfully.
it is important that Furthermore, an employee
it is able to attract, survey is conducted annually
retain, develop and to establish employee satisfaction
motivate the best and engagement and this
people with the right is compared with other companies,
capabilities throughout as well as previous surveys.
the organisation. Where appropriate, changes
There is a risk that in working practices are
without the right made in response to the
people our customer findings of these surveys.
service levels would Remuneration packages are
be affected. benchmarked to ensure that
they remain competitive
and a talent review process
is used to provide structured
succession planning.
------------------------------ ---------------------------------------
Business continuity The Company has in place
and crisis crisis and continuity plans
management that are tested and refreshed
Mitchells & Butlers regularly.
relies on its food The Company's third-party
and drink supply chain back-up facility, for retail
and the key IT systems support centre employees,
underlying the business has been successfully tested
to serve its guests to ensure critical business
efficiently and effectively. systems are able to function
Supply chain interruption, in the event of a disaster.
IT system failure In addition, during FY 2016,
or crises such as departmental Business Continuity
terrorist activity Plans have been revised,
or the threat of disease updated and reviewed by
pandemic might restrict the Risk Committee.
sales or reduce operational
effectiveness.
------------------------------ ---------------------------------------
Information security In FY 2016 a detailed review
and of information security,
disaster recovery disaster recovery and IT
There is a risk that resilience was performed
inadequate disaster in order to highlight any
recovery plans and gaps and address any challenges
information security that had been presented
processes are in place in exploring the viability
to mitigate against of a disaster recovery test
a system outage, or for our business critical
failure to ensure applications. During the
appropriate back-up year a number of improvements
facilities (covering have been made, including:
key business systems Establishment of an Information
and the recovery of Security Steering Group.
critical data) and Group Assurance review of
loss of sensitive Information Security controls.
data. Review and implementation
of appropriate cyber security
governance policy and procedures.
Ongoing security awareness
initiatives have been and
continue to be undertaken.
------------------------------ ---------------------------------------
Wage cost inflation A detailed review of the
There is a risk that risks associated with successfully
increased costs associated implementing the National
with the introduction Living Wage has been completed.
of the National Living This review has been undertaken
Wage may adversely at a strategic level and
impact upon overall seeks to ensure that appropriate
operational costs. mitigating actions are in
place, some of which are
in relation to how the Group
carefully manages productivity
and efficiency across the
estate. Implementation of
the National Living Wage
will continue to remain
an area of focus in FY 2017.
We are currently trialling
a new Time and Attendance
system to improve the management
controls and reporting of
staff hours.
------------------------------ ---------------------------------------
Borrowing covenants The Company maintains headroom
There are risks that against these risks. The
borrowing covenants finance team conducts daily
are breached because cash forecasting with periodic
of circumstances such reviews at the Treasury
as: Committee, the roles of
i. A change in the which include ensuring that
economic climate leading the Board Treasury Policy
to reduced cash inflows; is adhered to, monitoring
or its operation and agreeing
ii. A material change appropriate strategies for
in the valuation of recommendation to the Board.
the property portfolio. In addition, regular forecasting
and testing of covenant
compliance is performed
and frequent communication
is maintained with the Securitisation
Trustee.
------------------------------ ---------------------------------------
Pension fund deficit The Company has made significant
The material value additional contributions
of the pension fund to reduce the funding deficit.
deficit remains a In May 2014, the Company
risk. reached agreement on the
triennial valuation of the
Group pension schemes as
at 31 March 2013, at an
increased funding shortfall
of GBP572m (March 2010 valuation
GBP400m). The value of total
deficit at the end of FY
2016, following the revised
contributions, is GBP337m
(FY 2015 GBP350m).
------------------------------ ---------------------------------------
Failure to operate Mitchells & Butlers maintains
safely and legally a robust programme of health
A major health and and safety checks both within
safety failure could its restaurants and pubs
lead to illness, injury and throughout the supply
or loss of life or chain. The dedicated Safety
significant damage Assurance team uses a number
to the Company's or of technical partners including
a brand's reputation. 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. 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.
------------------------------ ---------------------------------------
Food supply chain M&B has a Safety Assurance
safety team and uses a number of
Malicious or accidental technical partners including
contamination in the food technologists, food
supply chain could safety experts, a microbiologist,
lead to food goods allergy consultants, trading
for resale being unfit standards specialists, nutritionists,
for human consumption etc.
or being dangerous M&B uses a robust system
to consume. This could of detailed product specifications.
lead to restrictions All food products are risk
in supply which in rated using standard industry
turn causes an increase definitions and assessment
in cost of goods and of the way the products
reduced sales due are used in M&B kitchens.
to consumer fears Suppliers are then risk
and physical harm rated according to their
to customers/employees. products.
Each food supplier is audited
at least once per annum
in respect of safety and
additionally in response
to a serious food safety
complaint or incident.
------------------------------ ---------------------------------------
For further information, please contact:
Investor Relations
James Cooper
0121 498 4525
Media:
James Murgatroyd (Finsbury)
020 7251 3801
This information is provided by RNS
The company news service from the London Stock Exchange
END
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