mitchells  butlers plc
27 fleet street
birmingham b3 1jp
tel 44 0 870 609 3000
fax 44 0 121 233 2246
wwwmbplccom
mitchells  butlers plc
annual report and accounts 2007
mitchells  butlers plc annual report and accounts 2007 overview operating and 
financial review
reports
accounts shareholder information
front cover the trout inn
premium country dining
wolvercote oxford
this page the old contemptibles
town pub 
birmingham
2 group at a glance
4 chairman’s statement
6 chief executive’s review
of the market  strategy
12 key performance
indicators
13 business review
17 financial review
22 risks and uncertainties
24 corporate social
responsibility 
28 directors’ report
30 corporate governance
report
33 audit committee report
35 remuneration report
46 independent auditors’
report to the members 
of mitchells  butlers plc
47 group income statement
48 group statement of
recognised income 
and expense
49 group balance sheet
50 group cash flow
statement
51 notes to the financial
statements
87 five year review
90 mitchells  butlers plc –
parent company 
balance sheet 
91 independent auditors’
report to the members of
mitchells  butlers plc
92 notes to the parent
company financial
statements
100 shareholder information
101 glossary
design and production the paper used in this report is derived from 
carnegieorr sustainable sources
print
royle corporate print
acquired sites
239 pub restaurant sites acquired from
whitbread plc in july 2006
amenity
design décor furniture and facilities
that contribute to the environment and
atmosphere of a pub 
awt average weekly take
the average sales per pub per week
calculated as total sales divided by the
average number of pubs trading during
the period divided by the number of
weeks in the period 
brands
outlets which trade under a common
name or their own individual names
under an externally recognised group
name with a consistent design drinks
range menu service style and
promotional programme
business franchise
an agreement where an entrepreneur
gains access to high quality pubs 
and a sophisticated business support
infrastructure whilst the company 
retains its scale purchasing and overhead
advantages and shares in the trading
upside through a franchise fee the
company receives a commercial rent for
the property and retains the property
ownership
capacity management
the process that seeks to ensure that 
a pub can service maximum volumes at
peak trading times whilst maintaining
customer satisfaction levels
cash flow from operations
the cash generated from the operations
of the company generally defined as
revenues less all operating expenses
cagr
compound annual growth rate
covers
the number of main meals sold
cover turn
the total number of main meals sold
divided by the number of main meals
that could be sold in one sitting
ebitda
earnings before interest tax
depreciation amortisation and
exceptional items
external costs
costs influenced by outside factors 
ie regulatory and energy costs
formats
outlets where to the customer’s eye 
the business trades without any overt
branding or badging but the customer
offer and operating template are
managed to defined standards
gross margin
gross profit divided by sales expressed
as a percentage
gross profit
sales less cost of goods sold expressed 
in monetary terms £s
incremental pretax returns
growth in annual pretax operating
profit expressed as a percentage of the
associated capital investment for sites
which do not have 12 months post
investment trading incremental return 
is estimated based on an annualisation 
of actual postinvestment trading
ifrs
international financial reporting
standards
national minimum wage
the minimum amount an employer
must pay its workers as defined by law
offtrade
any retail outlet which has a licence to
sell alcohol for consumption off the
premises
ontrade
any retail outlet which has a licence 
to sell alcohol for consumption on 
the premises eg pubs restaurants
nightclubs clubs
operating profit
earnings before interest tax and
exceptional items
outlet employment ratio
pub employment costs divided by total
sales expressed as a percentage
posttax cash return
ebitda less tax divided by average net
operating assets less revaluation reserve
plus accumulated depreciation plus
goodwill written off
productivity
sales less hourly paid wages divided by
the number of hours worked
refinancing
the repayment of an existing loan with
the proceeds from a new loan
reit
real estate investment trust
same outlet likeforlike sales growth
the increase in sales performance of all
managed pubs that were trading for the 
two periods being compared expressed 
as a percentage
securitisation
a means of raising finance secured on
identifiable and predictable cash flows
derived from a particular set of assets
share buyback
the purchase in the open market by 
a listed company of its own shares
uninvested likeforlike sales growth
the increase in sales performance 
of those managed pubs that have not
received expansionary investment of
more than £30000 in either year being
compared expressed as a percentage
glossary
101 mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 1
purpose
mitchells  butlers has a high quality well located pub
estate focused on the longterm growth in the informal
value for money eating and drinking out markets 
our operational and investment strategy is delivering
better choice and value to our customers and generating
profitable sales growth which is increasing our property
values as well as our investment returns – all to the 
benefit of shareholders
mitchells  butlers
annual report and accounts 2007
overview operating 
and financial
review
reports accounts shareholder
information
operational highlights
£18500
average weekly sales per pub
51
same outlet likeforlike food sales
22
same outlet likeforlike drinks sales
107million
meals served this year
financial highlights
1 0 1
revenue £1894m
11 0
operating profit £343m 
before exceptional items
212
earnings per share 355p 
before exceptional items
 163
dividend 1425p 2
group at a glance
mitchells  butlers’ knowhow
our proven expertise at every level combined
with a pub estate of exceptional quality in
prime locations continues to deliver on our
strategy of driving profitable volume growth
and creating shareholder value
mitchells  butlers
annual report and accounts 2007
increasing
property
values
consumer relevance 
and format evolution
our people
knowhow
value
and volume
strategy
increasing property values
through the successful
implementation of our operational
and investment strategy we are able
to generate further uplifts in asset
values within our high quality freehold
estate for the benefit of shareholders
acquired sites  pg 11
our people
key to the successful operation of
our pubs is our ability to recruit train
and retain the best people we offer
comprehensive training so
experience is not essential however
personality and a passion for
customer service are critical
cask ale training  pg 11
value and volume strategy
our operational strategy is to focus
on value and volume improving the
value we offer our customers leads 
to higher volumes and improved
productivity these gains along with
better purchasing terms enable us 
to reduce costs and then reinvest 
the margin gains in further quality 
and value
pub  carvery  pg 9
consumer relevance and 
format evolution
we strive to anticipate identify and
respond to changing demographic
profiles and consumer expectations
by evolving our brands and formats
sizzling pub co  pg 9 3 mitchells  butlers
annual report and accounts 2007
overview operating 
and financial
review
reports accounts shareholder
information
 6
 3
 1
  2 
  1 
4 
 0
4 
food
wine 
soft drinks
beer 
cider
spirits
mab same outlet likeforlike volume growth
estimated market volume growth 
based on bbpaac neilsenons
residential
the majority of our pubs have prime
locations in residential areas and are
therefore well positioned to take
advantage of the growth in eatingout as
well as increasing our drinks market share
75
of sales
1392
pubs
45
food sales mix
31
same outlet likeforlike sales growth
positioned for success
with 3 of the pubs in the uk we have 
a 10 share of pub market sales this 
has been achieved through a strategic
positioning of the estate to attractive 
areas of the market which has driven 
our growth particularly in food
£185k
2007 average weekly sales per pub
1998 £99k
37
2007 food sales mix
1998 22
107m
2007 no of main meals sold per annum
1998 41m
high street
we have successfully evolved our brands
and formats on the high street over a
number of years and this has continued 
to bear fruit seeing strong growth in a
competitive market
25
of sales
457
pubs
16
food sales mix
30
same outlet likeforlike sales growth
existing sites 
acquired sites
new acquisitions
growth and investment
we have invested a total of £253m in our
pubs over the year this has enabled us
to develop evolve and maintain our high
quality estate with significant returns on
investment whilst further improving our
relative value proposition in light of the
underinvestment in the overall ontrade
pub market
£11bn
over £11bn

uk expansionary
investment over the last 16 years
20
20

return on investments in the 
core estate over the last two years
20
c20 sales uplift from 
converted acquired sites
 excludes the acquired sites
our market
the pub market is estimated to be worth
over £19bn per annum it has benefited
over the last ten years from the growth
in the popularity of eatingout with
approximately a third of total household
food expenditure now made outside the
home this is in contrast to the more
traditional pub market of draught beer
which has declined down 27 in
volume since 1998
against this background our strategy
has proved exceptionally successful
driving market share gains in all key
categories
white webbs
toby carvery 
enfield
the flask
metro professionals
highgate london
investments in fy 2007
profitable market share gains delivering 
shareholder value
since our foundation in
2003 the board has had
an absolute commitment
to the creation and
delivery of value to
shareholders whether
through organic growth
investment in the
business for high returns
the pursuit of value
creative acquisitions or 
a return to shareholders
by way of dividends 
and share buybacks
roger carr 
chairman
4
chairman’s statement
since our foundation in 2003 the 
board has had an absolute commitment 
to the creation and delivery of value to
shareholders whether through organic
growth investment in the business for
high returns the pursuit of value creative
acquisitions or a return to shareholders 
by way of dividends and share buybacks 
with this guiding principle in mind and
recognising that a consistently higher
valuation is placed by property investors
on our estate than is valued within the
current integrated model the board has
been investigating options for capturing
the value of the property estate for
shareholders on a sustainable basis 
to that end after a competitive process
substantial progress was made in the
summer on negotiating a joint venture
transaction with r20 the investment
vehicle of robert tchenguiz in the 
final stage of this transaction we entered
into hedging agreements which were a
fundamental bank requirement to secure
the necessary financing arrangements 
for the joint venture and to achieve
appropriate ratings from ratings agencies
however the sudden and unprecedented
collapse of world debt markets rendered
the joint venture undeliverable but 
left the hedging arrangements in place
driven by a most unusual mix of inflation
and interest rate expectations combined 
with limited liquidity the cost of the
mitchells  butlers’ results this year reflect
a strong financial performance and we are
pleased with the operational development
across the business the executive team
has been particularly effective in growing
sales and profits despite some significant
economic and cost challenges whilst also
rapidly implementing the conversion of
the high quality whitbread sites acquired
in july 2006 we have extended our
leadership of the eatingout market
serving 107 million meals and generated
significant drinks market share gains 
as a result revenues have risen by 10
operating profits by 11 and earnings per
share before exceptional items by 21
this performance has enabled the board
to recommend a final dividend payment
of 100p per share taking the total
ordinary dividend for the year to 1425p
an increase of 163 this payment is
additional to the special dividend of
£486m paid to shareholders in october
2006 and reflects the strong growth 
in earnings per share as well as our
commitment to a progressive policy 
for dividends
mitchells  butlers
annual report and accounts 2007
roger carr
chairman 5
hedges at the yearend although not 
a cash item had risen to £155m after tax
the hedging arrangements have been
retained as the board remains committed
to a propertybased refinancing which
would utilise them once debt markets
have recovered the board will continue
to balance the assessment of risk with
potential reward of this policy
whilst the board’s focus has been on the
establishment of a property joint venture
alternative property based refinancing
structures remain under consideration 
in this context the board has received 
a proposal from r20 in respect of a
demerged real estate investment trust
‘reit’ structure which includes r20
procuring a fixed price underwriting for
in the region of 25 of the reit equity
the attractiveness and feasibility of this
proposal is being explored a reit
structure would have to meet the board’s
requirement for an appropriate balance 
to optimise the value of both demerged
companies as independent entities
the board will continue to review
alternative structures that would
demonstrably create value from the
property whilst providing an attractive
long term business model for the
operating company
in view of the focus on mitchells 
butlers’ real estate we considered it was
important to establish a current value of
our freehold and long leasehold properties
and we requested colliers cre to update
our valuation as at 29 september 2007
the revised value of the estate in our
books at £5bn represents a net increase 
of £11bn compared to the historical
accounting basis and provides a solid 
and up to date foundation for judging 
the asset strength of the group 
in turbulent times
because pubs are specific use assets 
it is the operational success of the business
which has been the primary factor in
growing the value of our freehold property
and which has also enabled us to return
over £11bn in cash to shareholders 
since demerger in 2003 over and above
ordinary dividends this performance 
has been driven by our operational teams
who i believe are collectively the best in
the industry i would like to thank them 
all for their perseverance flexibility and
hard work during the year
there has been one change to the 
board announced during the second half
of the year tony hughes 59 stepped
down as managing director restaurants
on 1 october 2007 since when he has
been assisting in the handover of his role
and the further development of food
capabilities in the business he will retire
from the board of the company on 
31 december 2007 he is succeeded 
by adam fowle previously managing
director for the acquired sites and
business development adam has some 
20 years experience in licensed retailing
having joined mitchells  butlers in 1985
he was previously managing director 
of the pubs  bars division becoming 
a retail director at sainsbury’s for two
years he rejoined mitchells  butlers 
in 2005
i welcome adam to the board and would
like to thank tony for his exceptional
contribution to the company over the last
12 years his vision and drive have been
instrumental in the development of our
highly successful pub restaurant brands 
i wish him every happiness in his
retirement
looking forward 2008 will undoubtedly
be a more challenging year with the
uncertain outlook for consumer
confidence and the first year of the
smoking ban however i am confident
that a clear management strategy for
competitive outperformance based on
high quality brands excellent sites and
strong operating skills will underpin the
continuing progress of the company
mitchells  butlers
annual report and accounts 2007
overview operating 
and financial
review
reports accounts shareholder
information
revenue £m
ebitda £m
operating profit £m
earnings per share p
final dividend per share p
crocce 
financial trends
notes
ebitda operating profit and
profit before tax are all stated
before exceptional items 
2007
2006
2005  1631m
  1720m
  1894m 2007
2006
2005  289m
  309m
  343m 2007
2006
2005  755p
  860p
  1000p
2007
2006
2005  403m
  430m
  472m 2007
2006
2005  254p
  293p
  355p 2007
2006
2005  106
  110
  108 chief executive’s review of 
the market and strategy
the market
this good performance has been achieved
against some difficult market conditions in
the latter part of the financial year rising
interest rates growing inflation pressures
and an increased tax burden have begun
to reduce consumer confidence
particularly of midmarket families with
mortgages industry growth this year has
also been limited by poor summer weather
this has coincided with the introduction
of the smoking ban in england and wales
which is accelerating the key underlying
trends in the market the growth in casual
pub users replacing frequent regulars the
increasing importance of food soft drinks
and wine against the decline of beer and
machine income the growth in pub usage
by women families and the growing
retired population and the decline in 
male session drinking and the growth 
in the importance of the offtrade and
supermarkets in particular contrasting
with the decline in the traditional ontrade
beer market
while the uncertain consumer
environment the smoking ban and 
the poor summer weather have each
contributed to a tightening of the 
shortterm market especially in drinks
the longterm outlook for the value for
money eatingout market continues to 
be good with ontrade food volumes up
3 in the year driven by longterm
lifestyle changes our sales strategy the
positioning of our brands and formats 
and the quality of our pub locations have
enabled us to achieve good sales growth 
in the year and leave us competitively well
this review ‘ofr’ has been prepared 
in accordance with the directors’ report
business review requirements of the
companies act 1985 it also incorporates
much of the guidance set out in the
accounting standards board’s reporting
statements on the operating and
financial review
all numbers except where stated are
before exceptional items
chief executive’s review 
of the market  strategy
as a result of our focus on amenity range
service and value mitchells  butlers has
delivered another strong trading
performance with likeforlike sales growth
of 3 in the year sales increases have
been effectively converted into profits
growth with further improvements in
employee productivity purchasing gains
and effective cost controls generating an
operating profit of £343m before
exceptional items retail net operating
margins are broadly in line with last year
despite £8m of regulatory cost increases
and as a result of the conversion of the
acquired sites £14m of closure and pre
opening costs earnings per share before
exceptional items of 355p for the year 
are 212 ahead of last year reflecting 
the strong trading performance the
contribution from the acquired sites a
significant development project completed
by standard commercial property
developments limited ‘scpd’ as well as
the share consolidation that accompanied
the special dividend earlier this year
mitchells  butlers
annual report and accounts 2007
mitchells  butlers has
delivered another strong
trading performance we
extended our leadership
of the eatingout market
serving 107 million
meals and making
sizeable drinks market
share gains
our focus on amenity
service and value has
positioned us well to
deliver further out
performance against the
market through the first
year of the smoking ban
and more challenging
market conditions
tim clarke 
chief executive
6
tim clarke
chief executive 7
placed to make further market share gains
in a more challenging environment during
the year ahead a number of longterm
factors reinforce our confidence
pub usage is becoming more 
popular although less regular
since 1990 the proportion of adults
visiting pubs at least monthly has risen
from 59 to 72 with a marked
acceleration in the growth of less frequent
customers since the turn of the century
this growth in total number of users
reflects the increased popularity and
availability of eatingout in pubs driven by
social and lifestyle changes such as the
increase in the female working population
and single households along with the
affluence and longevity of a growing
retired population alongside this the
traditional pastime of visiting the local
pub several times a week solely to drink
continues to decline with the proportion
of those visiting at least three times a week
reducing by more than half to 8 of the
adult population fig 1
the smoking ban which now applies to
the whole of the uk has served to
reinforce this development broadening
pubs’ appeal to new or less frequent users
who are now more attracted to pubs
particularly for eatingout evidence from
scotland which is now in the second year
of the smoking ban suggests that there
are significant longterm growth
opportunities for pubs focused on driving
food sales to these less frequent users
eatingout is increasingly the reason 
for visiting
the eatingout market has been growing
steadily over the past 20 years at around
4 in real terms reflecting both changing
lifestyles and the wider provision of good
value food offers eatingout now accounts
for approximately a third of total household
expenditure on food in the uk but it is
only at levels achieved in the us over 30
years ago the value for money offered by
the pub combined with its relaxed casual
dining atmosphere means that it has been
capturing an even greater share of this
wider eatingout market fig 2
through selective acquisitions and
disposals mitchells  butlers has
repositioned its estate of pubs to focus on
large sites which afford the scale to drive
high volumes of food at very attractive
prices the average main meal price in
mitchells  butlers sites is around £560
against a uk average of between £8 and
£9 this value for money positioning has
helped to drive food volume growth of
67 over the last five years
the customer appeal of pub food 
is expanding
traditionally eatingout in pubs and
particularly pub restaurants has been
concentrated in suburban areas amongst
predominantly middle income consumers
this segment of the market while still
growing has slowed as a result of
consumer economic pressures especially in
the light of rising mortgages bills and
other cost of living increases this in turn
has led to some pressure on sales for some
of our midmarket brands and formats
over recent years however the market 
for eatingout in pubs has broadened
considerably both to more affluent
customers through the development 
of gastropubs and to the more densely
populated housing estates through the
dramatic growth of local pub food 
the smoking ban has given this latter
market significant additional momentum
for example in the period since the
introduction of the ban to the year end
same outlet food sales in our local pubs
were up 14 with additional increases in
associated drinks sales
mitchells  butlers is developing its
formats to respond to these changing
market dynamics in the higher affluence
areas we have expanded our premium
country dining format and at the year
end we had 44 pubs operating under this
format across the country in the more
blue collar segments our sizzling pub co
and pub  carvery formats offer
exceptional value steak and chips at £399
or a full carvery meal at £350 during the
week these formats have seen very high
increased footfall and volume growth with
the average pub  carvery site now selling
over 2900 meals per week
mitchells  butlers
annual report and accounts 2007
overview operating
and financial
review
reports accounts shareholder
information
notes
since 1990 the proportion
of adults visiting pubs at
least monthly has risen
from 59 to 72
alongside this those
visiting the local pub 
several times a week
solely to drink has
declined
source tns alcovision 2007
notes
eating out now accounts
for a third of total
household expenditure 
on food in the uk but it
is only at levels achieved
in the us 30 years ago
source us us dept of
agriculture economic
research service
uk ons family spending
survey
fig 1
ontrade frequency of visits
 of adults visiting
2005 2000 1995 1990 1985 1980 1975 1970
us
uk
0
10
20
30
40
50
fig 2
eating out as a percentage of total
food expenditure uk vs us
2007
2000
1990  59
  63
  72
monthly
  41
  39
  38
weekly
2007
2000
1990
  17
  12
  8
3 times
a week
2007
2000
1990
 source menurama 8
chief executive’s review of 
the market and strategy
continued
growth in foodrelated drinks volume
an ever increasing proportion of drinks
sales in pubs are now associated with
ancillary purchases alongside food rather
than solely drinking occasions these
incremental drinks sales are biased
towards wine and soft drinks helping to
mitigate the impact of the poor summer
this year which has led to a slow down 
in the overall market for soft drinks and
wine which fell 2 the strength of our
food volume performance and our drinks
retailing skills has enabled us to maintain
our relative outperformance in both 
these categories making substantial market
share gains and showing positive volume
growth this has been achieved by
attracting new customers together with 
the value for money range and quality 
of our drinks offers
continued decline in ontrade beer
the same social and demographic
changes which are fuelling the growth 
in pub food are contributing to the
continued decline in the ontrade beer
market with volumes down 5 in the year
this has also been driven by the scale of
the retail beer price increases taken by the
ontrade in general and by the widening
price gap between the ontrade and the
supermarkets this has been particularly
evident with significant supermarket
discounting of beer around major holidays
such as christmas and important sporting
events such as the football and rugby
world cups
in response to falling volumes most of 
the ontrade has responded by consistently
raising prices ahead of general inflation
in contrast we have followed a policy 
of pricing restraint leading to sustained
beer market share gains for example 
on average a pint of standard lager in 
a mitchells  butlers pub is now £212 
36 pence cheaper than the average 
in the leased and tenanted competition
as a result same outlet beer volumes have
grown by 6 over the past four years
almost keeping in line with offtrade
volume and substantially outperforming
the rest of the ontrade volume decline 
of 15 fig 3
although the market is yet to experience 
a winter the english smoking ban 
is already accelerating the shift from 
ontrade to offtrade in the first four
months following the english ban which
was introduced on 1 july 2007 the 
ontrade has seen beer volumes decline 
by over 6 while the offtrade has seen
volumes grow by nearly 7
mitchells  butlers strategy for growth
the results achieved this year reflect our
leadership position in the growing eating
out market and further significant drinks
market share gains our average weekly
sales per pub are up 6 to £185k and
operating profit has increased by 11 
to £343m we have generated this
performance through the successful
implementation of our sales strategy
which is to
lead the value for money 
casual dining market
we have continued to capitalise on the
growth in informal value for money
eating out with same outlet likeforlike
food volumes increasing by 6 in the year
against a pub food market up 3 we are
now selling in total 107m meals a year
our total food sales including the benefits
of the acquired sites grew by 22 in the
year this has been achieved through a
constant focus on quality and value to the
customer and we will continue to reinvest
margin into our menu offers to generate
further profitable volume growth
the key to generating profitable food
growth is responding to customers’ 
high sensitivity to perceptions of value
this is reflected in both high consumer
price elasticities and rising menu 
quality expectations
our business model is focused on
attracting incremental food volumes 
which in turn generates high margin
drinks sales with low additional
employment costs the gross profit
generated has a high drop through 
to operating margin
as a result of this trading strategy across
the estate as a whole average weekly 
food sales rose by 12 while the average
number of meals served grew by 15 as
the mix moved strongly towards the value
segment thus although likeforlike food
prices rose 16 the average retail price
of food served fell by 08 due to the 
shift in mix
mitchells  butlers
annual report and accounts 2007
fig 3
mat beer volume
ontrade vs offtrade
080
085
090
095
100
105
110
sept 07 sept 06 sept 05 sept 04 sept 03
volume index
offtrade volume
mab volume
ontrade volume
notes
mab same outlet beer
volumes have grown 
by 6 over the past 
four years almost in 
line with offtrade 
volume and substantially 
outperforming the rest 
of the ontrade volume
decline of 15
source bbpa
 mab same outlet volumes
to october 2007
 excludes mab volume 9
we believe that the smoking ban now
implemented across the uk will further
strengthen the growth prospects for food
sales in our pubs by being able to attract
new customers previously deterred by
tobacco smoke since the smoking ban 
was implemented in england same outlet
likeforlike food sales are up 5
generate significant 
drinks market share gains
our same outlet likeforlike drinks sales
increased by 22 in the period sales
volumes a crucial measure of underlying
customer usage once again strongly out
performed the market across all the key
categories of beer cider wines spirits 
and soft drinks crucially our same outlet
beer and cider volumes were maintained
against the background of a 4 decline 
in the ontrade market for these products
in the year as a whole
we are outperforming in the beer 
category through widening the product
range that we offer improving the serve
quality through intensive cellar training
and investment in cooling systems as well
as delivering better presentation through
attractive glassware
value is also playing a key part in our
strong drinks market share gains with 
a wide gap opening between our pricing
and general ontrade pricing thereby
protecting our volumes from the
supermarket discounting as a result 
the average retail price of standard lager
is now 36 pence per pint less in our pubs
than the average in leased pubs this 
is despite our average retail drinks prices
rising by 34 partly due to likeforlike
price increases but also due to trading 
up to new premium products this
increase is less than the price rises across
the ontrade as a whole as a result 
of these product initiatives and pricing
policies on a longerterm perspective 
we have grown our same outlet beer
volumes by 6 over the past four years
against a 15 decline in the rest of the
ontrade
we have been following a similar strategy
in wine soft drinks and coffee which are
key attractions to new users of pubs 
we have been extending our ranges with
new premium products offering good
value own label products and enhancing
the serve quality wine sales volumes grew
last year by 3 with draught dispense now
in some 630 pubs in soft drinks we have
been successfully extending the range of
fresh juices cordials and mineral waters
we have also installed new branded coffee
offers in around 1200 pubs with an uplift
in sales volumes of 23
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
sizzling pub co
fundamental to the
market outperformance
of spc is the format’s
ability to attract an
increasing number of
customers into its pubs
through its great value
food offer to make
incremental fullprice
drinks sales to these
customers thus its
current offer of two main
meals for £6 from 230pm
to 600pm monday 
to friday has seen the
number of meals sold 
in this timeslot grow to
16000 per week over the
last two years
pub  carvery
as the rise in frequent
casual eatingout among
valuefocused consumers 
has continued apace
mitchells  butlers has
successfully evolved new
formats to tap into this
fastgrowing area of the
market one such format
is pub  carvery trialled
over two years ago and
now trading in 58 sites
nationally serving an
average of over 2900
meals a week the highest
we believe of any format 
in the industry the brand
provides a traditional
relaxed pub environment
with a freshlycooked
carvery offer priced 
from an incredible £350
for our guests this
represents better value
than eating at home 
the brand has average
weekly sales of almost
£30k per pub and is
providing very high
incremental returns 
on investment
overview 10
chief executive’s review of 
the market and strategy
continued
in addition we opened six new sites and
carried out 65 conversions and 13 growth
projects to change the customer offer or
increase the trading area of the site in the
core estate overall we are generating a
pretax incremental return of 20 on our
expansionary investment over the last two
years in the core estate
as a result of this strategy and in the light
of the general levels of investment in the
ontrade market as a whole the amenity
gap between our pubs and the majority 
of pubs in the uk is widening further
improving our overall customer value
proposition and our market share gains
relative to the rest of the ontrade
we continue to make targeted disposals
where the value to third parties is higher
than the trading value to us during the
year we generated £162m of disposal
proceeds including the sale of 102 pubs
to trust inns ltd in october 2006 taking
advantage of the buoyancy in the property
market to crystallise the value of smaller
pubs which had limited food growth
potential
grow profits and capture asset
appreciation to benefit shareholders
pubs are valued as specific use assets
primarily on the basis of their profitability
and our strong operating performance has
helped to generate further capital
appreciation within our estate this has
been reflected in the £11bn upward
revaluation of the estate to £50bn that has
been carried out in conjunction with our
property valuers colliers cre
our focus remains on releasing to
shareholders the benefits of this capital
appreciation at the start of the year in
october 2006 we returned £486m to
shareholders by means of a special
dividend of £1 per share crystallising for
shareholders the continuing growth in the
value of the estate
mitchells  butlers
annual report and accounts 2007
develop and evolve an industryleading
portfolio of formats to drive sales growth
our emphasis on innovation to develop
our brands and formats to keep pace 
with fast changing consumer expectations
is focused on ensuring that we continually
attract new customers and generate 
higher levels of visits we have developed
an industry leading portfolio of brands
and formats targeted at the growth
segments of the market average weekly
sales per pub are well over three times 
the industry average
for instance during the course of the year
we have further developed our category
killer value food formats sizzling pub co
pub  carvery and our new community
locals format ‘cornerstone’
these each offer outstanding food value
with main meals priced between £350 
and £450 in an attractive high amenity
pub environment pub  carvery is now
generating an average of over 2900 meals
per pub per week the highest we believe
of any format in the industry we have also
evolved our long established high street
formats of o’neill’s and scream with
strong performances resulting similarly
the development of our london offers of
nicholson’s and metro professionals has
generated exceptional double digit food
sales growth
deliver a profitable integrated 
food and drinks offer
whilst eating out is increasingly the reason
that customers visit a mitchells  butlers
pub combining higher growth lower
margin food sales with higher margin
drinks sales is key to maximising 
overall profitability our aim is to add
incremental food sales which can be
delivered at low marginal cost with an
attractive dropthrough to profit
extract volume driven efficiencies
our rising volumes are critical in
underpinning our efficiency gains 
this year we have seen a further strong
rate of increase in staff productivity 
with a 39 increase in staff contribution
per hour in the core estate this reflects
the impact of our training programmes 
our focus on the optimum deployment 
of staff and ever more refined techniques
for forecasting and scheduling these
have enabled us to realise significant
productivity gains and maintain our pub
employment cost ratio below 24 of sales
excluding the acquired sites despite a
further increase of 6 in the national
minimum wage in october 2006
on purchasing the cost of goods’ 
index increases have seen cost rises held
to under 1 significantly below inflation
while £7m per annum of purchasing
synergies from the acquired sites were
delivered this year ahead of our forecasts
at the time of acquisition
we also continue to drive process
efficiencies in the infrastructure to leverage
our scale economies for example the
extra overhead required to service some
£200m of sales from the acquired sites
will have been held to £2m per annum
these factors have enabled us to maintain
high net operating margins of 179
broadly in line with last year despite £8m
of regulatory cost increases and £14m of
closure and preopening costs
over the next 12 months we have
instigated a material rationalisation 
of the organisation with approximately
£7m of annualised cost efficiencies
targeted to be delivered in fy 2009
extend the skill base of operational
excellence throughout the estate
the skills and experience of our operating
teams provide a critical competitive
advantage for us in delivering high
standards of customer service efficiently
and profitably we have continued to 
build our staff training programmes and
industry leading practices in the areas 
of capacity management at peak times
kitchen processes and organisation bar
and floor service productivity staff
product knowledge and our responsiveness
to direct measures of feedback on guest
satisfaction this focus on operational
excellence is central to the high average
levels of sales and profitability generated
by our pubs
proactively manage the 
estate to maximise value
our strategy is to maximise the
profitability and value of each pub by
applying the breadth of our trading
formats as is most appropriate to the local
market and demographics during the
year we have been adding value through
this strategy to both the acquired sites
and the existing estate the acquired sites’
conversion programme remains on track
with 172 pubs now converted to our
formats we have moved at a rapid pace
with the integration programme to turn
around their previous underperformance
and provide a platform for future growth
average weekly sales uplifts on the
converted sites are running at
approximately 20 above the levels at
which the pubs were acquired we remain
confident in delivering the year three
target of 30 sales uplifts in the 2009
financial year 11
it has also been clear that property
investors are attracted to the longterm
secure growth prospects that can be
created through the rentalising of part of
our operational cash flows in a dedicated
property structure whether in a joint
venture a reit or another separate
property structure fundamentally 
higher values appear to be placed on 
the estate than when it is combined in 
an integrated model with the operations
we believe that substantial value can 
be potentially captured from our high
quality freehold and long leasehold 
assets through such structures a key
consideration in such a process is to
construct a lease arrangement which
ensures that both the property and the
operations remain mutually incentivised 
to continue to create longterm value
the board will continue to investigate
actively the options for capturing 
the value of the property estate for
shareholders on a sustainable basis
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
cask ale training
the quality of our 
cellar skills has been
instrumental in our
sustained gains in beer
market share with the
increase in demand for
cask ales ember inns
has invested this year in
specific training on the
management and serve 
of cask ale to ensure
customers enjoy the
finest quality pint
possible most ember
inns are now certified 
by cask marque an
independent accreditation
scheme to recognise
excellence in the service 
of cask ale and each 
pub has a beer quality
champion trained by
experienced brewers
acquired sites
in july last year we
acquired 239 of the best
pub restaurant sites in 
the uk these freehold
pubs were well located
large predominantly
residential and freehold 
or long leasehold and
approximately half
situated in the higher
growth regions of the
south east and south
west of england they
were therefore an
excellent strategic fit 
with the company’s
existing estate our key
capital investment priority
this year has been the
rapid and successful
conversion of these sites
and a total of £80m has
been invested to this end
overview 12
key performance indicators
alignment of remuneration incentives 
with key performance indicators ‘kpi’s
it is a key principle of the company 
to align the interests of the directors 
and other key employees with those of 
its shareholders executive remuneration
as detailed in the remuneration report
on page 35 therefore includes schemes
which contain elements of remuneration
linked to the kpis below same outlet 
likeforlike growth eps and incremental
return on expansionary capital are used as
performance measures within the short
term deferred incentive plan ‘stdip’
and the amount by which cash return 
on cash capital employed ‘crocce’
exceeds weighted average cost of capital
‘wacc’ is used within the performance
restricted share plan ‘prsp’ scheme
total shareholder return ‘tsr’ is also 
an important measure of performance 
for mitchells  butlers’ shareholders as 
it combines the increase in the value of
the company’s shares with any dividend
returns made to shareholders mitchells 
 butlers’ tsr performance compared
with its selected comparator group is
highlighted in the remuneration report
and forms one of the performance
conditions within the prsp scheme
for the purposes of remuneration
schemes tsr is taken over the life 
of the scheme rather than as an annual
measure over the last three years 
the company has delivered an increase 
of 216 in tsr reflecting the success 
that has been achieved in executing
mitchells  butlers’ strategy
mitchells  butlers implements and
monitors its performance against its
strategy principally through four key
performance indicators the performance
in the year is as follows
1 same outlet likeforlike sales 
growth – mitchells  butlers’
operational and marketing plans 
have delivered strong and consistent
likeforlike sales growth of 3 
in the year 41 in fy 2006
2 eps growth – mitchells  butlers’
strong trading performance together
with share repurchases and the share
consolidation that accompanied the
special dividend in october 2006
have generated growth in earnings 
per share before exceptional items of
212 in the year 154 in fy 2006
3 crocce in excess of wacc –
mitchells  butlers aims to maximise
the difference between the posttax
crocce and its wacc a key
measure of value creation a crocce
of 108 after tax was achieved in the
12 months to 29 september 2007
around 4 percentage points ahead 
of the estimated wacc for the year
reflecting good operating performance
supported by an efficient use of the
balance sheet crocce was 11
after tax in the 12 months to 30
september 2006 around 5 percentage
points ahead of our estimated wacc
for that year
4 incremental return on expansionary
capital – our track record in this area
has remained strong during the period
pretax returns of 20 are being
achieved on the core expansionary
capital projects carried out over the
last two years this measure excludes
the recently acquired sites due to the
relatively short period of ownership
and postconversion trading making 
it more difficult to estimate seasonal
patterns and annualised returns 
pretax returns of over 20 were
achieved on the core investments made
in the previous two years in fy 2006
mitchells  butlers
annual report and accounts 2007
kpi definitions
same outlet likeforlike sales growth
the sales this period compared to the
sales in the same period in the previous
year of all managed pubs that were
trading throughout the two periods being
compared expressed as a percentage
eps growth
the earnings per share for the period
before exceptional items compared to the
comparable period last year as reported in
the financial statements expressed as a
percentage
crocce in excess of wacc
the post tax cash return on cash capital
employed compared to the weighted
average cost of capital post tax where the
cash return is earnings before interest tax
depreciation and amortisation less cash
tax that would be charged on operating
profit without any tax shield from interest
cash capital employed is the average 
net operating assets plus the average
accumulated depreciation plus goodwill
written off less the historical revaluation
reserve
the wacc is the posttax weighted
average cost of capital calculated using
the posttax cost of debt during the year
and the cost of equity weighted according
to the proportion of the company
financed through debt and equity
incremental return on 
expansionary capital
incremental return is the growth in 
annual pub operating profit expressed 
as a percentage of the associated capital
investment for sites having received
expansionary investment over the last 
two financial years sites are included 
once they have been trading for three
months for sites which have not been
trading for a full 12 months incremental
return is estimated based on an
annualisation of actual postinvestment
trading expansionary capital is capital
invested to increase the trading area of 
a pub or to materially change the
customer offer expansionary capital
represents investment over and above the
maintenance investment cycle for a pub 13
lead the value for money 
casual dining market
historically mitchells  butlers’ sites were
heavily concentrated in the main uk
industrial areas of the north and midlands
however following a number of disposals
the acquisition of 550 pubs from allied
domecq in 1999 and the purchase of the
acquired sites in july 2006 as well as the
addition of over 400 individual sites since
the early 1990s the business is now spread
across the uk more broadly mirroring the
demographics of the uk population with
a higher weighting in the affluent south
east and london
our pubs are situated predominantly 
in residential areas 75 with the vast
majority either freehold or long leasehold
almost 90 and having high average
weekly sales of £185k over three times
greater than that of the average uk pub
the estate over the last 10 years has
therefore been fundamentally repositioned
to capture the strongest growth areas of
the market hence in a pub eatingout
market that has grown by 27 since 
2002 and is forecast to grow by a similar
amount in the next five years our 
food volumes have increased by 67
additionally our food sales mix has 
grown from 22 of total retail turnover 
in 1998 to 37 at the end of 2006 fig 4
critical to this growth has been our
absolute focus on providing value to our
customers through fresher higher 
quality ingredients at lower price points
consequently the average price of a main
meal in a mitchells  butlers pub is now
approximately £560 highlighting the
value proposition particularly considering
the relative healthiness quality of service
and amenity that our pubs offer
generate significant 
drinks market share gains
we focus our drinks retailing at delivering
a wide range of products from across the
world without being tied to any specific
producer for example across the
company we now stock over 40 draught
lagers compared to only five 10 years ago
our drinks volume outperformance has
been driven by our focus on improved
serve quality and on point of sale
communication with further range
extensions we are using our unit level
and purchasing scale economies to
improve quality and choice for our
customers and thereby gain market share
in beer we have increased the number of
outlets using glycol technology to improve
the quality of their draught beer and have
sought to improve the range of beers on
offer for example in nicholson’s we are
responding to market trends by increasing
the number of ales handles on each bar 
to six whilst increasing and premiumising
the lager choice by installing erdinger 
and peroni
we have been following a similar strategy
in other drinks categories extending our
ranges bringing in new premium
products offering good value own label
lines and upgrading the serve quality
in wine we are seeing both trading up to
better quality premium wines while at the
same time our own label wines such as
silverland have grown to around 25 of
sales we also now have draught wine
dispense in some 630 pubs with draught
wine sales now accounting for almost 10
of total wine sales
in soft drinks our priorities have been on
range extension in the fast growing fresh
juice as well as other categories in june
we refreshed the range of juices and
cordials in our pubs  bars division
driving sales growth of 16 in the period
to the end of the year despite the poor
summer weather
while in coffee we have installed branded
coffee offers such as costa illy and
segafredo in almost 1200 pubs
further extending the quality of our
drinks offers into these ‘nontraditional’
lines will add to the attraction of our pubs
to new and light users
this focus on choice value and quality 
has resulted in continued market share
gains in all the main drinks categories
evolve and develop our brands and
formats to drive sales growth through 
high levels of amenity and service
mitchells  butlers operates a spectrum 
of brands and formats tailored to specific
user groups in particular demographic
areas the division into residential and
high street areas is further split by
occasionality into drinksled and foodled
pubs giving the main segments of the
market local pubs pub restaurants 
high street pubs  bars and city centre
restaurants these have developed into
some of the strongest consumer brands
and formats in the industry the chart
overleaf sets out the range of brands and
formats operated by mitchells  butlers 
in each of these market segments fig 5
we evolve our brands and formats through
spending regular amounts of maintenance
expenditure to match changing consumer
needs this evolution can also be driven
through a change in our offers for
example our o’neill’s brand has been
refreshed in the year improving both the
range of drinks offered and the choice
and quality of its menu
we have also continued to trial new
formats to tap into fast growing areas of
the market one example of this is pub 
 carvery which was trialled over the last
two years and has grown to 58 sites it has
average weekly sales of almost £30k and 
is providing very high incremental return
on investment this format targets value
orientated consumers – offering a freshly
cooked carvery meal at around £399 in 
a pleasant relaxed environment which
represents better value for money than 
the home cooked alternative
our key capital investment priority this
year has been on the rapid and successful
conversion of the acquired sites to our
strong brands and formats the
outstanding quality of these sites has more
than met our preacquisition expectations
and the intensive preparations beforehand
have put us in a position to move rapidly
ahead with the conversion process the
scale and speed of this programme has
already converted the vast majority of
these sites a mere 16 months following
the acquisition
business review
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
this review expands 
on the operational
strategy outlined in the
chief executive’s review
describing the main
resources the group 
has deployed to achieve
its results and presenting
some examples of the
strategy in action in 
fy 2007
operating
and financial
review
overview vintage inns
208
acquired
sites
59
all bar
one
39
flares
reflex
45
o’neill’s
68
browns
14
classics
52
44
50
bistro
pubs
31
ember inns
183
sizzling
191
scream
75
28
nicholson’s
other
high street
259
metro
professionals
87
other locals
251
harvester
156
pub 
carvery
58
goose
32
toby
117
other pub
restaurants
premium
country
dining
residential
citycentre
foodled drinksled
local pubs
38
of pubs
30
of sales
high street pubs and bars
22
of pubs
21
of sales
pub restaurants
37
of pubs
45
of sales
restaurants
3
of pubs
4
of sales
14
business review
continued
mitchells  butlers
annual report and accounts 2007
individual
pub
strong 
branding
notes
1 excludes hollywood
bowl 25 outlets 
and alex 42 outlets
2 the group operates
4235 rooms adjacent
to its pubs and pub
restaurants under the
innkeeper’s lodge
and express by 
holiday inn brands 
3 percentages represent
split of uk managed
pubs and sales
excluding bowling 
at end fy 2007
4 when converted the
acquired sites are
included within the
relevant brand or
format
fig 5
brands and operating formats
fy 2007
fig 4
total and food average weekly take
per pub 19982007
0
2
4
6
8
10
12
14
16
18
20
2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
87
rise in total average 
weekly take per pub
1998–2007
221
rise in food average
weekly take per pub
1998–2007
other
food
£k 15
the initial sales uplifts are approximately
20 and we are on track to achieve 
our three year 30 target we expect 
a further steady build up over the next
couple of years
deliver a profitable integrated 
food and drinks offer
critical to the success of our strategy 
to date has been our focus on leveraging
the growth in food to attract customers 
to the pub thereby increasing higher
margin ancillary drinks sales to maximise
profitability we also aim to reinforce the
link between food and drink through our
marketing activity and sales promotions
in toby for example we have dropped
the price point for a carvery meal from
£525 to £500 in mid week this has not
only driven food volume but drinks sales
as well and most importantly net profit
extract volume driven efficiencies
scale at both the pub and corporate 
level is critical in ensuring the success 
of our value and volume strategy fig 6
at the corporate level the growth in 
our food sales over the last five years has
enabled us to increase our purchasing
power with suppliers for example we buy
products such as turkey tops in greater
quantities than the major supermarkets
this has helped to offset the faster growth
in relatively lower margin products such as
food and wine and enabled us to counter
the over £70m increase in regulatory and
energy costs during that period through
reducing purchasing costs we can increase
quality pass additional value on to our
customers and in turn further increase 
our volumes for example mitchells 
butlers purchased 11 million kilograms 
of jacket potatoes in the year better
market conditions and alternative sources
for potatoes have ensured improved
commercial terms for the company with 
a saving of 24 on our annual spend
this focus has enabled us to hold our cost
of goods flat this year with the gain on
new contracts offsetting inflation duty
increases and the contractual increases 
in ongoing agreements
at the pub level through operating large
scale pubs we are able to provide the
quality of amenity and service and the
range of products at good value prices
that today’s customers demand the
company constantly invests in developing
operating skills in the efficient
management of kitchens bars and serve
times to deliver high service standards 
at peak trading times our pub  carvery
format which offers freshly cooked food 
at a highly attractive £399 price point
has had significant success in the densely
populated housing estates in the last
three years therefore average spend per
head has fallen from £471 to £401 while
average meal volumes have risen from
1800 per week to over 2900 per week
profitability has been further enhanced 
by the incremental drinks sales generated
which along with productivity gains have
led to average profits per pub up 29 
it is our purchasing power allied to our
strong operating skills that have enabled
us to achieve this performance
unit scale allows the company to schedule
and deploy staff very closely to the trading
patterns of the pub thereby capturing
additional sales at busy times and reducing
labour costs during quiet periods through
sophisticated scheduling and forecasting
of sales we have been able to maintain
pub employment costs at under 24 of
sales despite the substantial real increases
in the national minimum wage
we have also had considerable success 
in applying our productivity systems and
purchasing power to the acquired sites
where we have made £7m of purchasing
gains during the year
extend the skill base of operational
excellence throughout the estate
key to the successful profitable operation
of our businesses is our ability to recruit
train and retain the best people our wide
range of brands and formats mean we are
able to offer a huge variety of opportunities
to our employees from bar staff to kitchen
manager to chef we offer comprehensive
training so experience is not always
essential however personality and 
a passion for excellent customer service 
are critical the company is committed 
to providing equality of opportunity 
to all employees without discrimination
and we are supportive of the employment
and advancement of disabled and
disadvantaged persons
mitchells  butlers deploys a 
combination of assessment centres
internal development centres recruitment
advertising interviewing and onjob
evaluation to recruit potential managers
and assistant managers and to help people
develop their careers at the same time 
we recognise that many people want the
flexibility of a parttime job in order to
suit their lifestyle we aim to make them
welcome in the workplace and to provide
for their needs
we currently employ around 43000
people and offer real opportunities to
build a career within the company this
year we invested an average of six days
training per employee with structured
training programmes including both on
and off the job training
mitchells  butlers is committed to
ensuring all retail management and staff
have the skills to perform their roles
effectively a significant amount is spent
on training managers and team leaders
through the competence in retail
management certificate and management
foundation course programmes each
year around 2500 of our retail employees
are trained through these programmes
giving them the essential skills to operate
our businesses legally and safely this
training also gives managers the knowledge
required to provide onsite training to
retail staff
the national certificate of personal
licence holders ncplh is an essential
qualification to progress to manager level
and employees can work towards this with
an experienced manager this year over
3000 employees achieved their ncplh
with the company the internal succession
rate to the post of assistant manager 
is around 70 for most of our brands 
and formats
our training programmes are not only
fundamental to motivating our employees
giving them the skills to achieve their
ambitions but also crucially they underpin
our commitment to operate our businesses
safely notably we have rigorous training
about the responsible retailing of alcohol
to give our retail employees the expertise
and the confidence to serve our customers
correctly our retail teams currently refuse
service to approximately 50000 people 
a month who are unable to provide proof
of their age
the company has two graduate
recruitment schemes the corporate
graduate programme and the vocational
graduate programme placing employees
on a fasttrack to a retail management
position within any given year we have
approximately 60 graduates participating
in our management training schemes and
for the second year running we achieved 
a springboard uk award for best student
placement for a large organisation
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
overview the company has had an established
comprehensive employee communications
programme in place for over 10 years 
a variety of channels such as team
meetings conferences inhouse
publications and the intranet keep 
staff informed on matters relating 
to the company and its performance
twoway communications between senior
management and employees are driven
primarily through regular discussion
groups at the corporate level and
operational communications forums 
a formal business forum at which
executive directors meet with elected
employee representatives to discuss
business concerns takes place annually
the yearly corporate employee
satisfaction survey gauges staff opinion 
on a wide variety of company issues 
and working practices in a confidential
manner and provides a continuous
objective measure for employee
satisfaction and engagement this year
the response rate to the survey improved
for the fourth consecutive year and the
continuing positive trend relating to
questions about employee engagement is
encouraging with over 90 of employees
feeling satisfied and motivated by their
work more than 94 of mitchells 
butlers’ employees would recommend 
the company as a good place to work
16
business review
continued
mitchells  butlers
annual report and accounts 2007
reinvest margin
in qualityvalue
staff training 
scheduling 
incentives
capacity
management
of productivity
supply chain
efficiency
reduce
costs
increase
volume
increase
buying power
increase
value
fig 6
value and volume cycle
current trading
current trading has been resilient with
same outlet likeforlike sales growing by
14 in the seven weeks to 17 november
trading in the three weeks to 17 november
has shown a material improvement on
october with same outlet likeforlike sales
up 24 following the launch of our new
winter menus this sales growth has been
generated against the background of the
start of the first winter period of the
smoking ban in england and wales a
continuing volume decline in the ontrade
beer market in october of approximately
8 and a more uncertain consumer
environment
same outlet uninvested
7 weeks ended likeforlike likeforlike
17 november 2007 sales growth sales growth
residential 13 10
high street 25 19
total 14 05
note these results include the acquired sites
within the residential estate local pubs
have traded well with same outlet likefor
like sales growth of 33 reflecting large
drinks market share gains continued
strong food sales growth and the benefit 
of the rugby world cup the rugby
tournament however had a negative
impact on our pub restaurants where like
forlike sales have been marginally positive
overall although they were up 26 in 
the last three weeks following the launch
of the new menus with their enhanced
quality and value
these new menus are part of a carefully
trialled and targeted margin investment
programme that we have started 
to implement within pub restaurants 
to drive profitable volume growth in
response to a slowing in performance
towards the end of last year particularly 
in the vintage inns format the initial
customer response to these new menus 
is very encouraging
in the high street which accounts for
25 of sales the successful evolution 
of our formats has generated likeforlike
sales ahead by 25 with strong growth 
in food sales trading in central london
has remained buoyant
trends following the smoking ban 
in england are currently broadly in line 
with those seen in the first year of the 
ban in scotland where there was a slowing
of overall sales in the winter months 
in the 20 weeks since the introduction 
of the smoking ban in england same
outlet likeforlike sales for our english
pubs excluding those previously converted
to nonsmoking increased by 15
with food sales up 5 and drinks sales
marginally up in the last seven weeks
these pubs grew by 07 on a same outlet
basis we continue to be encouraged by
the improvement in same outlet likefor
like sales this year within our scottish
pubs up 67 partly helped by the recent
euro 2008 football and we believe that
the overall impact of the ban will be
beneficial over time to larger well invested
pubs with an attractive food offer 17
mitchells  butlers has performed well
despite a more challenging consumer
environment in the second half of the year
earnings per share grew by 212 in the
year underpinning the proposed increase
of 163 in the annual ordinary dividend
to 1425 pence per share in addition to
the special dividend of £1 per share paid
to shareholders in october 2006
strong operating performance
our value and volume strategy combined
with the unrivalled quality of our pub
properties has been the key to our
resilient trading performance likeforlike
sales during the year were up 3 and net
retail operating margins were broadly
maintained despite £8m of additional
regulatory costs and £14m of closure 
and preopening costs arising from the
conversion of the acquired sites to our
brands and formats
investing for high returns
in the year we invested £261m in the
estate including £131m of expansionary
capital of which £80m was spent on
converting the acquired sites delivering 
a sales uplift of approximately 20 against
the levels at which the sites were acquired
our core expansionary investment over
the last two years has continued to deliver
incremental pretax returns of 20 whilst
the business as a whole achieved a posttax
cash return on capital employed of 108
valuecreative disposals
alternative use and investment 
demand for individual pubs reached
record levels during the year and we took
the opportunity to dispose of some of our
smaller pubs reinvesting the proceeds 
in high return projects within the estate
during the year we raised £162m of cash
from disposals including £101m from 
the sale of 102 smaller community pubs 
to trust inns ltd
releasing additional value from property
we conducted during the year a rigorous
review to determine whether the company’s
properties would be valued more highly 
if they were separated from the operations
of the business our markettesting in the
spring confirmed that specialist investors
would place a substantially higher value
on our properties than that which was
implied in our stock market valuation 
we examined alternative structures to
access this upside for shareholders and
concluded that a joint venture would offer
the best route to crystallise a substantial
proportion of the property value whilst
protecting the integrity of the existing 
and proven integrated operating model
following a competitive process we
negotiated terms with r20 for the sale 
of a 50 stake in a £45bn joint venture
comprising the majority of our freehold
and long leasehold properties shortly
before finalising the agreement the
sudden debt market crisis in july meant
that the transaction could not 
be implemented
financial review
mitchells  butlers
annual report and accounts 2007
operating
and financial
review
reports accounts shareholder
information
our operational focus
remains on driving
profitable sales growth
and generating strong
cash flows we will also
continue to look at the
best opportunity to
release value from our
property to benefit
shareholders
karim naffah
finance director
karim naffah
finance director
overview 18
financial review
hedging arrangements
in the final stage of the planned
transaction mitchells  butlers and 
r20 separately entered into debt hedging
arrangements ‘hedges’ comprising
interest rate and inflation swaps intended
to be contributed to the joint venture
these were required to support the
delivery of the financing package the
turbulence in the debt markets since july
has led to longterm interest rates falling
at the same time longterm inflation
expectations have risen whilst the market
liquidity for such instruments has sharply
diminished these three factors combined
to produce a posttax deficit on the
hedges of £155m against the markto
market values at the balance sheet date
this is not a cash loss to the business 
as the hedges have not been closed out
and we continue to expect that they 
will be utilised in a future property 
based refinancing once debts markets
have stabilised
property valuation
given the continued focus on our 
estate we completed a revaluation of 
the properties as at 29 september 2007
the revised value of £50bn is included 
in our financial statements and represents
a net increase of £11bn against the
historical accounting approach whilst 
this accounting valuation is consistent 
with the existing structure of the group 
our property valuers have advised that
within an opcopropco structure our
freehold and long leasehold properties
would support a market rent of £280m
and a rental yield of 58 with an
indicative value of £48bn before any
allowance for purchaser’s costs this
valuation covers only the rent from these
properties and therefore excludes the
other cash flows received by the operating
company which based on trading in 
the year ended 29 september 2007 
would equate to some £200m of
underlying ebitda
pensions
after £40m of additional contributions
there was a pension deficit of £18m at the
end of september under ias19 with more
prudent mortality assumptions applied
following the actuarial valuation exercise
in the year the formal actuarial valuation
as at 31 march 2007 indicates a larger
deficit of around £250m reflecting 
the more conservative gilts basis for
discounting future liabilities in line with
the new pension regulations the company
is finalising with the trustees a formal
recovery plan to close this deficit by 2017
as part of this plan in addition to ordinary
annual service contributions we expect
that further contributions of £24m will 
be made in each of the next three years
summary
our operational focus remains on driving
profitable sales growth and generating
strong cash flows we will also continue 
to look at the best opportunity to release
additional value from our property to
benefit shareholders
karim naffah
finance director
financial review
total revenue for the year was £1894m
up 101 on last year including the first
full year of ownership of the acquired
sites purchased from whitbread plc in
july 2006
strong likeforlike sales growth continued
in the year in both residential and high
street areas reflecting resilient trading in
more challenging conditions in the second
half and further significant market share
gains
likeforlike sales same outlet uninvested
residential 31 15
high street 30 23
total 30 17
 excludes the acquired sites
with the success of our ongoing sales and
marketing activities same outlet food sales
and drink sales were up 51 and 22
respectively with average retail prices 
up less than 2 reinforcing our value
position in a market characterised by real
price increases
our increased share of the drinks market
and the increasing scale of our food
volumes have helped us to mitigate
continuing pressures on the cost of goods
purchased including drinks duty rises 
and global food inflation overall gross
margins were slightly below last year
reflecting a further shift in the sales mix
towards the higher growth but lower
margin categories of food and wine
mitchells  butlers
annual report and accounts 2007
pubs and bars
financial year 2007
restaurants
financial year 2007
10
revenue £968m
47
same outlet likeforlike sales
67
operating profit £191m
 before exceptional items
 excluding the acquired sites
30
uninvested likeforlike sales
192
revenue £908m
10
same outlet likeforlike sales
115
operating profit £145m
 before exceptional items
 excluding the acquired sites
0 1
uninvested likeforlike sales 19
by continuing to improve employee
productivity our pub employment ratio 
in the estate was maintained at below 24
of sales despite further increases in the
national minimum wage adding £7m to
our labour costs as a result the net retail
operating margin at 179 was broadly in
line with last year despite £14m of oneoff
closure and preopening costs incurred 
in connection with the conversion of the
acquired sites
we invested £261m in the year of 
which £8m related to the purchase of the
acquired sites and £80m was invested 
to convert the majority of those sites to
mitchells  butlers’ brands and formats
in the existing estate £122m was invested
to maintain the high levels of amenity 
in the pubs and in the continuing
development and evolution of our brands
and formats and £51m was spent on
expansionary projects during the year 
six new pubs opened and 65 existing 
pubs were converted to one of our brands
or formats to uplift their sales and 
profits we are continuing to achieve 
an incremental pretax return of 20 
on the core expansionary projects 
of the last two years
during the year we raised £162m of cash
from disposals including £101m from the
sale of 102 of our smaller community pubs
to trust inns ltd as a result net capital
investment during the year was £99m
in addition to the strong retail
performance standard commercial
property developments limited ‘scpd’
realised a property development profit 
of £7m in the year as a result total
operating profit before exceptional items
was £343m up 11 on last year
pubs  bars
fy 2007 growth
revenue £968m 10
operating profit £191m 67
same outlet likeforlike sales 47
uninvested likeforlike sales 30
 before exceptional items
 excluding the acquired sites
after the disposal of 86 managed pubs 
eight transfers to business franchise and 
one pub transferred to the restaurants
division there were 1129 managed pubs
in the pubs  bars division at the end of
the period including 28 acquired sites 
there were on average 1159 managed
pubs trading during the year
revenue was up 1 including £16m 
from the acquired sites transferred to the
division following conversion excluding
those acquired sites and adjusting for
major disposals made last year and at the
beginning of this year revenue in the core
pubs  bars estate was up 35
pubs  bars continued to achieve market
share gains in drink sales as a result of
the widening gap between our amenity
product range and value for money and
that of the competition food sales in 
the year were up 125 excluding the
acquired sites driven by growth in the
residential pubs notably sizzling pub co
and metro professionals as well as by the
town pubs and the central london estate
the review of machines stakes and prizes
shortly before the beginning of the year
raised the maximum stake to 50p and the
maximum prize to £35 these changes
were modestly beneficial to machine sales
although the negative impact of the
smoking ban introduced in july meant
that machine sales were slightly down 
for the year as a whole
a total of 56 conversions were completed
predominantly to residential brands and
formats such as sizzling pub co ember
inns and the metro professionals format
as a result of tight cost control and
improved employee productivity pubs 
 bars operating profit of £191m before
exceptional items was up 67 in the year
and the net operating margin increased
from 187 last year to 197 excluding
the contribution from the acquired sites
and the impact of major disposals in the
comparative year the existing pubs  bars
estate increased operating profit by 119
restaurants
fy 2007 growth
revenue £908m 192
operating profit £145m 115
same outlet likeforlike sales 10
uninvested likeforlike sales 01
 before exceptional items
 excluding the acquired sites 
following the disposal of 15 pubs and
eight transfers to business franchise 
there were 787 managed pubs in the
restaurants division at the end of the
period including 191 acquired sites 
two new individual pubs and one pub
transferred from pubs  bars there 
were on average 768 managed pubs
trading during the year
revenue was up 192 including £160m
from the acquired sites excluding the
acquired sites there were on average 591
pubs trading during the year and in these
pub restaurants revenue grew by 27
with food sales up 39 and drinks up 07
the restaurants division successfully
integrated the acquired sites and
completed the majority of the conversions
during the year as planned growth in 
the rest of the estate slowed during the
year primarily as a result of increasing
economic pressure on midmarket
consumers and greater intensity of
competition in pub food management
focus is on continuing to evolve the offer
in our brands and formats combined 
with further efficiency and productivity
improvements
restaurants division operating profit of
£145m before exceptional items was up
115 on last year including £16m from
the acquired sites the net operating
margin fell from 171 last year to 160
due to the closure and preopening costs
associated with the conversion of the
acquired sites and the comparatively low
margins achieved by those sites prior to
conversion excluding the acquired sites
the restaurants estate increased operating
profit by 4 with a net operating margin
improvement of 02 percentage points
standard commercial property
developments limited ‘scpd’
scpd generated £18m of revenue and
£7m of operating profit in the year 
the majority of which related to the sale 
of a longterm development property 
in burtonontrent which was completed
in august
property backed refinancing and 
related hedging arrangements
substantial progress was made in the
summer on structuring an attractive
property transaction with terms largely
concluded with r20 the investment
vehicle of robert tchenguiz based on the
sale of a 50 stake in a £45bn property
joint venture comprising approximately
1300 pubs and £240m of rent
in the final stage of the planned
transaction the company and r20
separately entered into certain interest
and inflation hedging arrangements
intended to be contributed to the joint
venture however the sudden rapid
deterioration in debt market conditions 
in late july meant that a financing
package could not be obtained and 
the transaction could not be executed
the hedges remain in place as it is 
the board’s intention to utilise these
financial instruments in a future property
based refinancing once debt markets 
have stabilised
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
overview 20
financial review
continued
property revaluation
given the continued focus on the value 
of our estate we have completed a
revaluation of our fixed assets based on an
updated valuation by our property valuers
colliers cre of our freehold and long
leasehold properties as at 29 september
2007 for accounting purposes this
valuation represents the aggregate value 
of each individual pub rather than a
portfolio approach based primarily on 
the trading cash flows the revised value
of the properties at £50bn represents 
a net increase of £11bn compared with
the historical accounting basis we will
continue to revalue our properties each
year on a rolling basis
the accounting valuation of the property
is consistent with the existing structure 
of the group however based on advice
received from colliers cre all of the
freehold and long leasehold properties
within an opcopropco structure would
support a market rent of £280m and a
rental yield of 58 with an indicative
valuation of £48bn for the propco before
any allowance for purchaser’s costs based
on a 35 year rpiinflating lease this
valuation approach relates only to the 
rent from the freehold and long leasehold
pubs and therefore excludes the cash flows
received by the operating company from
these pubs as well as other company cash
flows including those from existing short
leasehold pubs based on the year ended
29 september 2007 this would equate 
to approximately £200m of underlying
ebitda
exceptional items
exceptional items are those which are
separately identified by virtue of their 
size or incidence so as to allow a better
understanding of the underlying trading
performance of the group exceptional
items are generally those which do 
not form part of the core operations 
of the group as a result the board
focuses on ‘preexceptional’ performance
measures in order to compare underlying
performance year on year
the interest rate and inflation hedging
arrangements that the company entered
into in july 2007 provide an economic
hedge against the future anticipated cash
flows associated with a property based
refinancing however they do not qualify
for hedge accounting as defined in ias39
movements in their fair values are therefore
recognised directly in the group income
statement within exceptional finance
costs the total fair value movement 
of these instruments during the year
reported within exceptional finance 
was £221m £155m after tax
an exceptional loss on property related
items of £23m £17m after tax arose
during the year this was caused by
impairment arising from the revaluation
of the property portfolio of £45m 
£32m after tax partly offset by net 
profits on the disposal of properties 
of £22m £15m after tax primarily
related to the sale of 102 pubs to 
trust inns ltd on 6 october 2006
exceptional costs of £4m £3m after tax
were incurred in the first half of the year
relating to the integration of the acquired
sites whilst a further £7m of costs 
£7m after tax were incurred in the
second half of the year relating primarily
to professional advisers’ fees in relation to
the board’s review of a potential property
refinancing and the proposed joint
venture transaction with r20
the tax impact of the above exceptional
items is a £74m credit in addition there
is a further £26m of exceptional deferred
tax credits giving a total of £100m
primarily relating to the change in the
corporate tax rate from 30 to 28 
in april 2008
finance costs and revenue
finance costs during the year were £153m
before exceptional items £35m higher
than last year finance revenue of £6m 
was achieved on the group’s cash balances
being £3m lower than last year the net
increase in finance costs of £38m against
last year reflects the higher level of debt 
in the group following the purchase of 
the acquired sites in july 2006 and the
payment of a special dividend of £486m
to shareholders in october 2007
net finance income from pensions 
was £11m £3m higher than last year 
due to an increase in the expected return 
on the assets in the pension scheme
compared to the charge for the liabilities
the group’s blended net interest rate for
the year was 55 including the impact 
of the net finance income from pensions
taxation
the tax charge for the year was 
£62m before exceptional items this 
is an effective rate of 30 of profit 
before tax one percentage point lower 
than the previous year the decrease has 
been achieved following the resolution
during the second half of the year 
of various outstanding items with 
hm revenue  customs
as part of the exercise to revalue assets 
at the year end management also reviewed
the group’s deferred tax provision for
unrealised gains under ias12 this review
has resulted in a prior year adjustment
which has the effect of increasing the
deferred tax provision in the opening
balance sheet by £76m this adjustment
has no impact on previously reported
profits in addition as a result of the
revaluation the deferred tax balance at 29
september 2007 has increased by £296m
earnings per share
earnings per share were 355p before
exceptional items 212 ahead of 
last year in addition to the growth in
operating profit earnings per share have
benefited from a 17 reduction in the
average number of shares mainly as a
result of the 34 for 41 share consolidation
carried out in october 2006 in conjunction
with the special dividend
the loss per share after exceptional 
items was 25p reflecting primarily 
the exceptional accounting losses 
on the financial hedges entered into 
in anticipation of a property refinancing 
and the proposed joint venture 
transaction with r20
dividends and returns to shareholders
the board is recommending a final
dividend for 2007 of 10 pence per share
together with the interim dividend 
of 425 pence paid on 29 june 2007 
this gives a total dividend for the year 
of 1425 pence up 163 on last year
notwithstanding a more challenging
outlook for the economy and the market
environment the proposed increase in 
the ordinary dividend is underpinned by
the strong underlying earnings per share
performance achieved in the year the
board remains committed to a progressive
policy for dividends consistent with the
growth prospects of the company
subject to approval at the agm on 
31 january 2008 the final dividend will be
paid on 4 february 2008 to shareholders
on the register on 7 december 2007
since mitchells  butlers listed in 
april 2003 shareholders have received
more than £11bn in cash through special
dividends and share buybacks over 
and above ordinary dividends paid 
this represents more than 70 of the
company’s market capitalisation at 
the time
mitchells  butlers
annual report and accounts 2007 21
cash flow and net debt
the group’s operations continue to be
highly cash generative cash flow from
operations was £447m before exceptional
items but after additional pension
contributions of £40m net capital
expenditure was £99m including £80m 
of expenditure on the acquired sites
£51m of core expansionary capital
investment £122m of maintenance
capital less disposal proceeds of £162m
net interest paid of £145m was £38m
higher than last year reflecting the
increased level of debt in the business 
tax paid was £33m £15m lower than 
the prior year driven primarily by £10m 
of tax rebates received from hm revenue
 customs during the year payments
totalling £52m were made in respect of
the final dividend for fy 2006 and the
interim dividend for fy 2007 in addition
to the special dividend of £486m paid 
in october 2006 £46m was spent to
repurchase shares whilst £11m was
received from the exercise of share options
as a result there was a net cash outflow 
of £399m before exceptional costs of
£12m and bond repayments of £39m 
this compared to a cash outflow before
exceptional items of £428m last year 
net debt at the year end was £2479m
£412m higher than last year representing
525 times ebitda
share price and market capitalisation
at 28 september 2007 the share price 
was 611p compared with 590p at the start
of the financial year an increase of 36
the company is a member of the ftse
100 index with a market capitalisation of
approximately £25bn at the year end
treasury management
the financial risks faced by the group 
are identified and managed by a central
treasury department the activities of 
the treasury function are carried out in
accordance with board approved policies
and are subject to regular audit the
department does not operate as a profit
centre
at 29 september 2007 the group’s 
net debt of £2479m consisted of the
securitised debt of £2356m borrowings
on the group’s revolving credit facility of
£192m derivatives hedging balance sheet
debt of £45m other loan notes and
finance lease obligations together totalling
£3m offset by a cash balance of £117m
pensions
on an ias19 basis the group’s pensions
schemes showed a deficit of £18m 
£14m after tax at 29 september 2007
compared with £99m £67m after tax
at 30 september 2006 the reduction in
the deficit reflects the benefit of £40m of
additional pension contributions paid in
the year and improved investment returns
partially offset by updated assumptions of
life expectancy
the full actuarial review undertaken in the
year is currently being finalised based on
the value of the schemes as at 31 march
2007 the actuarial valuation adopts a
more conservative basis of discounting the
liabilities than is required by ias19 and
the preliminary result shows a deficit of
approximately £250m in line with the
new pensions regulations the company 
is finalising with the trustees a formal
recovery plan to close this deficit by 2017
as part of this plan in addition to the
ordinary annual service contributions 
it is expected that further contributions 
of £24m will be made in each of the next
three years the contribution for the 
year ending 30 september 2008 will
include the payment of £20m previously
committed at the time of the special
dividend in october 2006 the level of
additional contributions will be subject to
review during the next actuarial valuation
as at 31 march 2010
shareholders’ funds
shareholders funds were £1576m at the
end of the year including the impact of
the property revaluation compared with
£1209m at the start of the year which
incorporates the impact of the £76m prior
year adjustment
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
overview this section highlights some of the
particular risks which affect the group 
but it is not intended to be an extensive
analysis of all risks which may arise in the
ordinary course of business or otherwise
some risks may be unknown to the group
and other risks currently regarded as
immaterial could turn out to be material
there are a number of potential risks and
uncertainties which could have a material
impact on mitchells  butlers’ longterm
performance and achievement of its
strategy these risks and uncertainties
arise as a result of operational market
driven regulatory or financial factors
mitchells  butlers adopts a proactive
approach in this area with each member 
of the executive committee taking
responsibility for the management of 
the specific risks associated with their
department and a dedicated group
assurance team who report through the
hr director and general counsel to 
the executive committee and the board 
the company also operates a risk
management and disclosure forum 
to ensure that the impact of any new
legislation is considered and that action
plans are put in place to address any
required changes in advance of any
implementation date although mitchells
 butlers has been successful in mitigating
these risks in the past there is no
guarantee that it can continue to do so
operational factors
brands formats and offerings
mitchells  butlers’ pubs and pub
restaurants compete for consumers 
with a wide variety of other branded 
and nonbranded pubs and restaurants 
as well as offlicences supermarkets 
and takeaways the large supermarket
groups in particular often sell alcohol
and especially canned beer at greatly
discounted prices as an element of their
marketing strategy in 1980 88 of beer
in the uk was sold through pubs clubs
and restaurants the ‘ontrade’ this
percentage has been declining steadily
such that during 2006 57 of beer was
sold through the ontrade with the
supermarkets’ and offlicences’ share 
the ‘offtrade’ having increased 
to 43 competition in the eatingout
market has also increased particularly as 
a result of the smoking ban implemented
in england on 1 july 2007 which has 
led to many pubs either beginning to 
sell food having not done so previously 
or improving their food offers
changes in consumer tastes in both food
and drink for example the heightened
awareness of healthy eating and
demographic trends over time may 
affect the appeal of mitchells  butlers’
pubs and pub restaurants to consumers
this may be especially so if the group
does not anticipate identify and respond
by evolving its brands formats and
offerings adequately and sufficiently
promptly to reflect such changes in
consumer requirements and preferences
particularly in regard to the growth in the
eatingout market
mitchells  butlers has a sales and
marketing executive for both the pubs 
bars and restaurants divisions chaired by
the divisional managing director which
actively monitors consumer trends and the
corresponding relevance of mitchells 
butlers’ brands formats and offerings
trials of new operating formats and the
evolution of existing offers are undertaken
every year as part of this programme a
recent example has been the development
of a format called pub  carvery which
was first trialled over two years ago and is
now trading in 58 sites
supplier dynamics
food and drink purchases account for the
majority of mitchells  butlers’ supply
costs mitchells  butlers’ relative size 
in the pub and pub restaurant sector
particularly following the purchase of the
acquired sites in july 2006 has allowed it
to renegotiate supplier contracts
successfully in the past year in addition 
as the group’s legacy tied drinks
arrangements have reduced mitchells 
butlers has taken advantage of its
increasing freedom to increase the choice
available to customers on favourable terms
however mitchells  butlers is
contractually bound to use certain
suppliers most notably as part of its
acquisition of the 550 former allied
domecq sites in 1999 mitchells  butlers
was required to purchase a fixed minimum
volume of carlsbergtetley products until
12 december 2007 mitchells  butlers is
also tied for approximately half of its soft
drinks volume to britvic plc until february
2008 if mitchells  butlers was unable 
to satisfy its minimum purchase volume
obligations to a material extent under
these agreements it would be obliged to
pay liquidated damages during the year
mitchells  butlers took the opportunity
to enter into a new shorterterm
agreement with carlsbergtetley which 
has given more flexibility to the business
and negotiations are well advanced to
ensure that the company’s soft drinks
purchases are renegotiated on more
favourable terms
in food the larger number of food
ingredients and the more fragmented
nature of food suppliers on the world
commodity markets means that mitchells
 butlers has a greater opportunity to
source food purchases from alternative
suppliers than is the case with the drinks
market however mitchells  butlers
continues to be exposed to the risk of
higher food prices depending on global
availability and demand for products
mitchells  butlers is also exposed to
movements in distribution costs for food
and drinks as suppliers’ increased fuel
costs may be passed on to the company
mitchells  butlers is a large commercial
user of gas and electricity and is therefore
subject to fluctuations in utility costs for
example both gas and electricity costs
rose sharply during fy 2006 due to global
price increases in order to reduce
exposure to shortterm fluctuations in
energy prices mitchells  butlers has a
rolling programme of forward purchases
for three six nine and 12 months in the
future an energy awareness team has
been established to review energy usage
and is working with the business to
continue to find ways to promote further
efficiencies in energy consumption
market driven factors
consumer expenditure
the group’s revenues are linked 
to the economic climate in the united
kingdom and to a much lesser extent 
in germany changes in consumer
expenditure may arise as a result of the
general economic situation such as in the
latter part of this year when rising interest
rates and an increased indirect tax burden
appear to have impacted consumer
confidence or more localised specific
factors such as decreased activity in the
financial markets or from reduced tourist
visits as a result of terrorist activity
throughout the world and in london
consumer expenditure in pubs may also
vary through consumer perceptions and
attitudes to safety and public order and
localised national or international scares
as a result of food contamination
however mitchells  butlers has over
2000 individual businesses and its range
of brands and formats targeting different
income and consumer groups mitigates
this risk this wide range of offers
provides the flexibility to respond to
changes in consumer behaviour through
either the evolution of the offer or the
substitution of an alternative operating
format or brand at a particular location
seasonality
customer visits to the company’s pubs
and pub restaurants are generally higher
during holiday periods such as christmas
and new year and over bank holidays
frequenting of pubs and pub restaurants
is otherwise slightly lower during the
winter months than in the summer visits
to pubs and pub restaurants are also
22
risks and uncertainties
mitchells  butlers
annual report and accounts 2007 23 mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
affected by the weather with warm sunny
weather being particularly advantageous
for pubs and pub restaurants with
gardens mitchells  butlers’ marketing
strategies address the impact of
seasonality wherever possible to capture
demand in busy periods and to encourage
customers to visit in quieter periods
regulatory factors
mitchells  butlers operates in a heavily
regulated sector and changes in regulation
can have a significant impact upon
mitchells  butlers’ business some
examples of the regulatory changes which
could affect mitchells  butlers include
smoking bans
approximately 90 of mitchells  butlers
pubs are in england where a full ban 
on smoking in pubs came into force on 
1 july 2007 trading in scotland in the
first year after its ban came into force 
26 march 2006 was less strong than in
england in the same period with total
likeforlike sales up 2 with food sales 
up 8 and drink sales flat since then
sales have continued to grow but at a
slower rate than in england as new users
sample the smokefree atmosphere our
experience so far suggests that large pubs
with the capability to serve high volumes
of good food at attractive prices will
benefit from a ban on smoking however
smaller pubs with limited food capacity
and a bias towards beer sales and machine
income are likely to suffer
national minimum wage
the government has increased the
minimum wage by an average of 56 per
annum over the last five years materially
above the rate of inflation it currently
stands at £552 per hour having been
increased by 17p for adults in october
2007 the low pay commission has
recommended that any further increase 
in the national minimum wage should
remain in line with general wage inflation
although to date this recommendation has
not been endorsed by the government in
addition in october 2007 the government
increased the statutory holiday entitlement
of all employees from 20 to 24 days which
further increased the group’s employment
costs mitchells  butlers has in the past
successfully mitigated these statutory
increases in employment costs through
productivity improvements these
measures have allowed the group to
maintain the ratio of employment costs 
at 24 of sales in 2007
licensing
new licensing laws became fully effective
in november 2005 licensing matters
were taken away from the magistrates
courts and transferred to local authorities
and a new requirement was introduced for
operators of licensed premises to hold a
premises licence and the manager of the
pub to hold a personal licence greater
flexibility of opening hours was introduced
which allows pub operators to apply to the
local authority for permission to change
opening hours subject to objections from
local residents the police and other
relevant agencies
however these groups also now have 
a right to ask the local authority for the
premises licence to be reviewed at any
time where they believe that any of the
government’s licensing objectives are
being compromised as a result of such
review the local authority has the power 
to attach further conditions to the licence
reduce trading hours call for a change 
in the pub management or ultimately
suspend or revoke the licence
mitchells  butlers has been successful in
the vast majority of initial applications to
extend previous opening hours typically
for an additional hour or two later in the
week and at the weekend the group
does not hold any 24 hour licences
mitchells  butlers also invests heavily in
the ongoing training of its managers and
staff to ensure continued compliance with
licensing laws and that its pubs are
operated in a responsible manner
changes in taxation
mitchells  butlers’ activities are affected
by a number of taxrelated matters 
these include duty on alcoholic
beverages property rates vat and 
other business taxes
mitchells  butlers ensures it takes
appropriate action to minimise the risks
from regulation through a number of
means including
• active participation with industry
organisations such as the british 
beer  pub association and the british
hospitality association ensuring that
effective lobbying is carried out
• the operation of a risk management
and disclosure forum to ensure that 
the impact of any new legislation 
is considered and that action plans 
are put in place to address any 
required changes in advance of 
any implementation date and
• continual consideration of operating
procedures to ensure any cost increases
arising from such changes can be
mitigated through productivity increases
or other cost reductions
financial factors
pension funding
mitchells  butlers participates in defined
benefit pension schemes which give rise to
various funding risks the main risk is the
variability of the amount of contributions
required to be paid to the schemes by
mitchells  butlers in order to account 
for past service benefit deficits and future
service benefit accruals these in turn are
impacted at any point in time by changes
in life expectancy assumptions the
performance of the stock market and
bond yields
recent legislation means that it may 
be appropriate to approach the pensions
regulator for preclearance of agreements
reached with the pension trustees at the
time of significant corporate transactions
such clearance may include a requirement
to increase the level of funding over a
reduced timescale
mitchells  butlers’ pension risks have
been mitigated by the closure of the
defined benefit schemes to new entrants 
in 2002 as an alternative a competitive
defined contribution pension scheme is
now available to eligible new employees
mitchells  butlers also maintains a close
dialogue with the pensions schemes’
trustees and two of the trustees are
appointed by the company as a result 
of the funding deficits in the schemes 
the company has made additional
contributions of £145m over and above
the regular service contributions since
listing in 2003 in order to proactively
reduce the deficit the company has
previously committed to make an
additional contribution of £20m during
fy 2008 a full actuarial valuation of the
schemes was conducted during fy 2007
the results of this review are expected to
be finalised in december 2007 together
with a fresh schedule of contributions as
required by the new pensions regulations
property backed refinancing and related
hedging arrangements
during the year the company entered
into certain interest and inflation hedging
arrangements in anticipation of a property
backed refinancing around a joint venture
arrangement with r20 however the
sudden rapid deterioration in debt
market conditions in the summer meant
that an appropriate financing structure
was not possible and the transaction could
not be executed the hedges remain in
place as the board believes it is highly
likely that these financial instruments 
will be used in a future property based 
refinancing once debt markets have
stabilised however there is a risk that no
property based refinancing will occur or
that the company’s strategy could change
such that the hedges would need to be
closed out which would currently result 
in a substantial cash loss the company
has in place a process to monitor the
movement in the value of the hedges 
and the position is kept under close 
and regular review by the board
overview 24
corporate social responsibility
corporate social responsibility
mitchells  butlers operates in a highly
regulated industry and recognises that it
has an inherent duty under its licences to
• ensure the responsible operation of its
premises for guests employees and the
wider community and
• promote the objectives of the licensing
act 2003 namely
– the prevention of crime and disorder
– public safety
– the prevention of public nuisance
– the protection of children from harm
this is at the heart of the business and is
why the company strives to ensure that
corporate social responsibility underpins
its business operation at every level
please note that the following sections
provide a summary only of our policies 
in respect of our corporate social
responsibility ‘csr’ activity a more
detailed account of mitchells  butlers’
csr practices and corporate compliance
including case studies can be found 
in our separately published corporate
social responsibility review 2007 
on wwwmbplccomcsrreview
corporate governance
the board is responsible for the company’s
internal control and risk management
system the corporate governance report
on page 30 gives details of how this
responsibility is discharged
our executive committee comprising the
hr director and general counsel as well
as the chief executive and the finance
director has adopted a code of ethics 
to promote honest and ethical conduct
throughout our business the code
includes
• the ethical handling of actual or
apparent conflicts of interest between
personal and professional relationships
• a requirement that any hospitality from
suppliers must be approved with a
presumption against its acceptance
• requiring full fair accurate timely and
understandable disclosure in periodic
reports required to be filed by mitchells
 butlers plc and
• promoting compliance with all
applicable rules and regulations that
apply to the company and its officers
our business conduct guidelines describe
the standards of behaviour expected from
those working for the company our
corporate reputation depends on all staff
acting in good conscience and behaving
with integrity in our dealings with
employees shareholders customers
suppliers and all other stakeholders
mitchells  butlers offers an
independently administered confidential
hotline also known as a whistleblowing
hotline for any employee wishing to report
any concern that they may have that 
they feel unable to raise with their line
manager all whistleblowing allegations
are reported to and considered by the
audit committee
the board takes regular account of 
social environmental and ethical matters
concerning the company through the
chief executive’s regular reports to the
board presentations to the board at its
strategy meetings and through adoption
of its code of ethics the company
secretary is responsible for ensuring that
directors are made aware of and receive
training in respect of such matters 
formal reporting to the board of social
environmental and ethical matters takes
place every six months
identification and assessment of risks 
to the company’s short and longterm
value arising from social ethical and
environmental matters are achieved
through the company’s major risk and
assurance review regularly updated and
presented to the board annually the
board considers as an intrinsic part of this
review whether the steps taken to address
these risks are appropriate these are
detailed further below opportunities 
to enhance the company’s value are
considered as part of that review and 
at strategy discussions
a mitchells  butlers risk management
and disclosure forum exists to monitor
the company’s activities and to ensure
that a consistent and proactive approach
to managing risk occurs throughout the
company including those of a social
ethical or environmental nature the
forum aims to meet on a quarterly basis
the board also receives regular updates
on significant legislative change or
development in corporate governance 
best practice the company’s social
environmental and ethical disclosures 
are reviewed for accuracy through 
a combination of detailed verification 
by members of management responsible 
for the individual areas of corporate 
social responsibility and high level reviews
by the members of the board and
executive committee
alcohol and social responsibility policy
mitchells  butlers was one of the first
companies to establish a comprehensive
policy for the responsible retailing of
alcohol in 2000 our alcohol  social
responsibility ‘asr’ policy includes clear
guidelines on the responsible operation 
of our pubs the sale and promotion 
of alcohol our under18s policy and 
our staff training and development
programmes
the introduction of our leading 
policy shaped the development and
implementation of industrywide codes 
of conduct we update the policy regularly
relaunching it in october 2004 and in
may 2006 in august this year we updated
it again to reflect
• the acceptance of an international
passport as a recognised form of
identification – we continue also to
accept uk passports uk photograph
driving licences and proof of age cards
bearing the pass hologram as
recognised forms of identification
• the tightening of guidelines around
pricing discounting and promotions
across our businesses and
• the inclusion of new information 
listing the units of alcohol contained 
in commonly served drinks
we are determined to ensure that
mitchells  butlers’ pubs are operated 
in a way that fully justifies the grant 
of a licence for the responsible retailing 
of alcohol in that regard we were 
pleased to be recognised by the morning
advertiser for the second time as this
year’s most responsible drinks retailer 
in the managed pubs category
challenge 21
mitchells  butlers led the industry in
2004 when we launched our challenge 21
campaign it is not an over 21s only
entrance policy but rather a requirement
to ask for identification if a customer
appears to be under 21 so as to prove
that he or she is at least 18 years of age
the principle of challenge 21 – to support
and educate our staff and customers on
the issues relating to underage sales – is
now firmly embedded in our company
culture to monitor the scale of attempted
underage purchasing in our pubs we now
record all instances of refusal to serve and
are currently registering around 50000
refusals per month
mitchells  butlers
annual report and accounts 2007 25
through our various training
programmes all our retail staff including
door staff are made aware of their
responsibilities for serving alcohol and the
personal penalties for failure to comply
with the licensing act requirements
we also regularly audit our businesses to
ensure our practices are being maintained
and employ an independent company to
perform test purchasing visits as an
additional check
responsible promotions policy
as part of our alcohol and social
responsibility policy we have strict
guidelines in place regarding the pricing
and promotion of our drinks any
promotional activity must be approved by
the marketing director and observe the
guidelines outlined in our asr policy
the guiding principles of the company’s
policy are
• to offer guests real service and value 
at fair competitive prices
• to seek to encourage guests to return 
to mitchells  butlers’ pubs rather than
to encourage increased consumption 
by guests during a single visit
• to ensure that guests are offered choice
and value without inducements to drink
to excess we will not for example 
offer any ‘2 for the price of 1’ drinks
promotions and
• to encourage and support designated
driver and other antidrinkdrive
initiatives
mitchells  butlers is a member of 
the british beer  pub association and
played a central role in the formation 
of the organisation’s code encouraging
promotional activity in addition all our
promotional activity complies with the
portman group’s code of practice
alcohol awareness
mitchells  butlers is a major contributor
to the drinkaware trust an independent
ukwide charitable trust with the objective
of positively changing public behaviour
and the national drinking culture to
tackle alcoholrelated harms
our updated asr policy issued in august
this year now includes details of units 
of alcohol in relation to the abv of every
alcoholic product sold in our pubs to
ensure staff can assist customers who ask
for guidance brand specific training also
highlights abv information to managers
and staff as part of all new product
inductions abv information and
responsible retailing messages are also
included in some drinks menus and
promotional materials to raise staff 
and customer awareness
conflict management
mitchells  butlers recognises that failure
to identify and resolve potential sources 
of conflict in our pubs or on the door can
have serious consequences as a result
conflict management training is
undertaken as appropriate within our
retail management training helping to
reduce the risk of serious incidents and
better protect both employees and guests
conflict management training also helps
our staff to manage issues associated with
drugs abuse where there is any evidence
of such in our businesses we move 
rapidly to assess the situation and take
appropriate tough measures to resolve 
the matter immediately
industry partnerships
mitchells  butlers works closely with the
key authorities including the police fire
local authorities and the government in
pursuit of our commitment to responsible
retailing practices
it is company policy for all pub managers
to join and support their local ‘pubwatch’
if one exists which we believe both builds
relationships within the area and helps
staff identify and resolve potential issues
before they escalate
across the country a number of individual
mitchells  butlers’ pubs have gained
recognition from city councils and the
police for running safe responsible
businesses via the best bar none award
scheme and city safe schemes
we support regional crime and disorder
partnerships and aim to participate fully
in the drive against ‘binge drinking’ and
its related effects as outlined in the
alcohol harm reduction strategy for
england
we also support a number of business
improvement district schemes ‘bid’s for
example broad street birmingham and
the current proposal for nottingham
licensing act
the licensing act 2003 came into effect
on 24 november 2005 from that date
licensed premises have been able to 
make use of any variations to previous
opening hours granted by the relevant
local authority
mitchells  butlers has so far applied 
for an average of just over one additional
hour per day per pub in making
applications we sought to balance the
opportunity to offer our guests more
flexible opening times with respect for
local communities in the vast majority 
of cases our applications were successful
we do not hold – not did we apply for –
any 24 hour licences
the company’s experience has been 
one of successful implementation much 
of this due to extensive education as to 
the objectives of the licensing act and
training to ensure these objectives are
adhered to we have seen a marginal
increase in sales overall but with less
pressure at closing time and few instances
of disorder
smoking bans
we believe the introduction of the smoking
bans will be beneficial to our businesses in
the longerterm they present us with a
real opportunity to attract new customers
who did not previously use pubs because
of tobacco smoke to come into our pubs
and pub restaurants across the country
our experience since the bans came into
force shows that our large pubs serving
high volumes of good food at attractive
prices are already seeing this benefit
we’re continuing to develop the
reputation of our pubs for serving 
good food at good value prices focusing
on innovation in the development of 
our menus and drinks ranges to appeal 
to a wider consumer base arising from 
the ban
gaming
mitchells  butlers was involved in the
creation of the first gaming industry code
of practice in the 1990s that aimed to
prevent under 18s from playing pub
gaming machines the company has
contributed for many years – in cash and
in kind – to charities such as gamcare
that work in the area of treatment for
problem gamblers in recent years the
company’s contributions have been made
via the responsibility in gambling trust
a mitchells  butlers’ senior manager 
is a trustee in this organisation
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
overview 26
corporate social responsibility
continued
mitchells  butlers through its support 
of the british beer  pub association 
has worked closely with the gambling
commission on the drafting of the
gaming machine code of practice which
replaced the industry’s voluntary code
from 1 september 2007
good food
as the food supply chain becomes
increasingly complex we take into account
a number of factors when purchasing our
food including the health and safety of
our guests food quality provenance and
price with large scale national brands
competing in different markets we require
our suppliers to guarantee the supply of
large quantities of quality ingredients for
the life of a menu our objective is to offer
competitively priced dishes of appropriate
quality and provenance in some instances
this means a regional supplier and in
others worldwide suppliers
the company carries out an assessment 
of the environmental policies and
practices of its major food suppliers
growers and farmers who supply mitchells
 butlers are required to comply with the
euroretailer produce working group’s
standard of good agricultural practice
known as the eurepgap standard
mitchells  butlers also abides by the
code of ethics issued by the chartered
institute of purchasing  supply 
our guiding principles on corporate
procurement are to
• enable the company to conduct its
procurement activities in a safe ethical
and professional manner
• exclude suppliers that disregard health
safety and welfare
• ensure all personnel conform with
national and eu laws
• ensure representatives are fair and
reasonable with suppliers
• exclude suppliers that exploit 
people unfairly and
• utilise suppliers that preferentially
conserve the environment
we aim to offer a broad range of menu
items across our estate so guests seeking
healthier options have plenty of choice
focus on menu development has enabled
us to offer guests more variety from
sharing ‘small plate’ dishes in ember inns
or handcut maris piper chips in our
metro professionals format to the best 
of british range in cornerstone our
successful community pub format we
have developed fresh dishes that are
healthier and tastier with a wider taste
profile and better provenance – for
example organically farmed shetland
salmon features on the new vintage inns
menu vegetarian options are also now
available across all our pubs
we continue to develop our menus with
the focus to improve nutritional content
in august this year harvester came top in
a national comparison of family restaurant
chains carried out by an independent
dietician on their offer of healthy dishes
for children
following the successful launch of
nutritional data on the harvester website
in 2006 toby carvery will also be
launching a nutritional breakdown 
of all menu items in late 2007
environment
mitchells  butlers takes its environmental
responsibilities seriously and has a policy
of seeking continuous improvement 
with particular focus on recycling and
energy usage
we have an established recycling
programme for both glass and cardboard
in our businesses in the last 12 months
we recycled over 14000 tonnes of waste
we are continuing to make excellent
progress in energy saving and in
september we opened our first ‘green’
business designed to trial a number 
of energy saving measures at the toby
carvery banbury
health and safety
the company strives to provide a safe
environment for all employees guests 
and other visitors to its premises and 
to comply with relevant health and safety
legislation in addition the company
• aims to protect the health 
of employees with suitable 
specific workbased strategies
• seeks to minimise the risk of injury 
from company activity and
• ensures that sufficient resources 
and information are made available 
and suitable management systems 
are in place to address health and 
safety matters
the board is responsible for ensuring 
that sufficient resources are available to
implement its health and safety policy
compliance with company policy is
monitored and audited centrally and a
comprehensive annual health and safety
report is produced for the board
we use a major independent safety and
assurance company to audit and report 
on safety practices in all businesses 
these inspections which take place 
at least twice a year form an essential
element of our due diligence and include
• independently verified means 
of monitoring safety standards
• consistent audit systems across 
all businesses
• an independent assessment of 
standards combined with technical
support on improvement and
• education and training provision 
for businesses failing to meet our
expectations as to standards
in addition to the company’s internal
safety experts leading consultants in the
fields of food safety and fire safety are also
retained as a result of the audits the
management of health and safety food
safety and fire safety is constantly reviewed
and improvements made where necessary
employees
please refer to section on operational
excellence in the ofr on page 15
community
mitchells  butlers is fully aware that 
each one of our businesses has an impact
on its local community we aim to ensure
that this impact is always positive and we
pursue this through a carefully planned
blend of local and national initiatives
our pub managers raise thousands of
pounds for charity they are supported 
via the company’s community awards
and celebrated via the annual heart of the
community awards these recognise the
efforts of our employees in forging good
relations with their local communities 
a prize fund of £25000 is collectively
received by the award winners for
donation to their individually chosen 
good cause
our employee community award scheme
encourages our employees to support 
a charity through their own fundraising
activity or voluntary work during the last
year £40000 has been donated by them to
variety of charities as part of the scheme
throughout the year we have also made 
a number of inkind donations such as
offering use of company facilities such 
as meeting rooms free of charge and
donating complimentary meals in our
businesses to local community groups
charities and schools
our brands are also are key supporters 
of national and local charities of their own
choice harvester restaurants have raised
£33500 over the last 12 months for the
children’s charity makeawish foundation
uk in march ember inns launched its
second annual ‘drink pink’ fundraising
campaign for leading charity against
breast cancer all ember inns pubs
donated 5p per glass of rose wine sold
raising over £17000 for the charity
mitchells  butlers
annual report and accounts 2007 27
around 600 pubs including ember inns
o’neill’s and hollywood bowl offered
customers a free hot drink in return 
for a voluntary donation as part of their
involvement in macmillan cancer’s world’s
biggest coffee morning in september
we have marked our third year of
partnership with barnardo’s with a further
£50000 donation employees have also
supported the partnerships through
fundraising activities and raised an
additional £12600
as a leading company with its
headquarters in birmingham we also
sponsor a number of successful arts
organisations in the city partnerships
include the city of birmingham
symphony orchestra cbso
birmingham royal ballet brb the
birmingham rep and excathedra
our special cbso on the road
programme enters its fifth year of
community based concerts performed 
by members of the orchestra around the
midlands region the concerts allow
community organisations to experience a
performance from professional musicians
while providing an excellent fundraising
opportunity our longstanding relationship
with the cbso was recognised in this
year’s jaguar arts  business awards
where the partnership won the inaugural
champion of champions award
this year our sponsorship of the
birmingham royal ballet has secured
additional funds from arts  business
enabling the brb to host a series of
educational dance workshops in primary
schools across the west midlands
including these additional funds from 
arts  business the company’s total
corporate donations were over £215000
2006 £200000
our role as good neighbours
our pubs and pub restaurants play an
important role in the heart of thousands
of communities across the uk as a
company we committed to encouraging
and supporting our businesses in this
community role through schemes such 
as pubwatch and via our managers taking
part in residents association meetings we
are able to establish better communication
and develop valuable discussion forums
for handling and resolving local issues
the ofr’s intent is to provide
information to shareholders and should
not be relied upon by any other party 
or for any other purpose this ofr 
and other sections of this annual 
report contain certain forwardlooking
statements with respect to the operations
performance and financial condition 
of the group by their nature these
statements involve uncertainty since future
events and circumstances can cause results
and developments to differ materially
from those anticipated the ofr and
other sections of this annual report
contain certain forwardlooking statements
which are made by the directors in good
faith based on the information available 
to them up to the date of their approval of
the financial statements and the company
undertakes no obligation to update these
forwardlooking statements the forward
looking statements should be treated with
caution due to the inherent uncertainties
including both economic and business 
risk factors underlying any such forward
looking information nothing in this
annual report should be construed 
as a profit forecast
the ofr has been prepared for the
group as a whole and therefore gives
greater emphasis to those matters which
are of significance to mitchells  butlers
plc and its subsidiary undertakings 
when viewed as a whole
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating
and financial
review
overview 28 mitchells  butlers
annual report and accounts 2007
directors’ report
the directors present their report 
for the year ended 29 september 2007
this directors’ report should be read 
in conjunction with the chairman’s
statement and the operating and 
financial review the ‘ofr’ on pages 6 
to 27 including the chief executive’s
review the business review the finance 
director’s report the financial review and
corporate governance report which are
incorporated in this directors’ report by
reference details of the group’s policy
on addressing financial risks are given 
in the ofr and details about financial
instruments are shown in note 21 to the
financial statements together these
sections include information about the
group’s business its financial performance
during the year likely developments 
and any principal risks and uncertainties
associated with the group’s business 
principal activities
mitchells  butlers is the leading operator
of managed pubs and pub restaurants
with an estate of 2003 sites as at 
29 september 2007 principally located 
in the uk and with 42 pub restaurants 
in germany 
share capital
on 1 october 2006 the company had
486910806 ordinary shares of 7
1
⁄ 12p in
issue on 18 october 2006 having been
approved by shareholders the share
capital of the company was consolidated
in the ratio of 34 new ordinary shares 
of 8
13
⁄ 24p for every 41 existing ordinary
shares of 7
1
⁄ 12p as at 29 september 2007
403779693 ordinary shares of 8
13
⁄ 24p 
were in issue 1241969 of these shares
were held in treasury and the company’s
employee share trusts held 1070449
shares at the year end at the 2007 agm
shareholders passed a resolution to permit
the directors to undertake market
purchases of up to 40346510 of the
company’s shares this authority will
expire at the earlier of the 2008 agm 
or 1 may 2008
refinancing and return of funds to
shareholders
following the refinancing that was
completed in september 2006 and the
share capital consolidation that occurred
on 18 october 2006 the company paid 
a special dividend of £1 per share on 
25 october 2006 as an interim dividend
for the year ending 29 september 2007 
final dividend
the board recommends a final dividend
for the year ended 29 september 2007 of
100p per share to be paid on 4 february
2008 to shareholders on the register at
close of business on 7 december 2007
this makes a total dividend including the
special dividend for the year of 11425p
per share 2006 1225p per share 
securities and exchange commission
‘sec’ registration 
since listing in 2003 the company 
has been registered with the sec under
the us securities exchange act of 1934
the ‘exchange act’ however the fact
that the presence of us shareholders 
was largely a legacy of the demerger from
six continents in 2003 and the increasing
costs of maintaining this us registration
prompted the company to seek to
terminate its exchange act registration
following changes to the sec rules
implemented in june 2007 the company
was able to file to terminate its registration
under the exchange act this termination
took effect on 4 september 2007 and
accordingly the company no longer has
any reporting requirements under the
exchange act
substantial shareholders
as at 28 november 2007 the company
had been notified of the following
beneficial interests 3 or more 
in its shares
axa sa 986
credit suisse securities europe limited 529
the royal bank of scotland group plc 419
marshall wace core fund limited 407
legal  general group plc 403
elpida group limited 400
mf global uk limited 385
deutsche bank ag 368
violet capital group ltd 300
directors
details of the directors who served on 
the board during the year are shown 
on page 31 there were no changes 
to the board during the year
adam fowle was appointed to the 
board on 1 october 2007 tony hughes
will stand down from the board on 
31 december 2007
interests of the directors and their
immediate families in the issued share
capital of the company are set out in the
remuneration report on page 44
directors’ indemnity
the directors have the benefit of the
indemnity provision contained in the
company’s articles of association this
provision which is a qualifying third party
indemnity provision as defined by section
234 of the companies act 2006 was in
force throughout the last financial year
and is currently in force the company
also purchased and maintained
throughout the financial year directors’
and officers’ liability insurance in respect
of itself and its directors
employees
the group employed an average of
42741 people in 2007 2006 38677
details of the group’s employment
policies are shown on page 15 of 
the ofr
employee engagement
mitchells  butlers is keen to encourage
employee participation in the group’s
success through share ownership and
operates the following share plans
sharesave plan
in june 2007 options were granted to
2498 employees over 938905 shares 
at 711p per share a 20 discount on 
the market price on 1 october 2006 
the company’s first sharesave offering
matured and 994 employees were able 
to exercise options over shares priced 
at 169p per share when the market price 
was 58633p per share this represented a
gain on their investment of over £22000
for those employees saving the maximum
amount under the plan
share incentive plan
during the year 115121 shares were
allocated by the share incentive plan
trustee as free shares to 9967 eligible
employees subject to the plan rules
executive share option plan
following the 2006 agm no further
awards are to be made under this plan
3796471 shares under option and 
priced at 2525p per share vested during
the year
performance restricted share plan
during the year 65 employees were
granted nominal cost options which 
will vest subject to the achievement of
performance conditions as set out in the
remuneration report on page 38
1033897 shares under option vested
during the year 29
short term deferred incentive plan
at the discretion of the remuneration
committee directors may elect to take
50 or more of their annual bonus in
shares these shares are deferred for three
years a matching award of shares is made
by the company which is is also deferred
for a three year period and is released
subject to the satisfaction of a three year
performance condition
252979 shares were released under this
plan during the year the executive
directors’ maximum accrued entitlements
for the year and for future release are set
out on page 42
headroom limits
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 plans 
at 29 september 2007 the position under
the ‘5 in 10 years’ limit for discretionary
plans was that shares equivalent to 206
of the ordinary share capital had been
allocated and under the ‘10 in 10 years’
limit for all share plans was that shares
equivalent to 24 of the ordinary share
capital had been allocated the company
uses an employee benefit trust to acquire
shares in the market when appropriate to
satisfy share awards 
health and safety
it is important to the group to provide
and maintain a safe environment for all
employees customers and other visitors 
to its premises the group complies with
relevant health and safety legislation
details are included on page 26 of 
the ofr
environmental and social responsibility
mitchells  butlers recognises that it is
part of a wider community and recognises
that it has a responsibility to act in a way
that respects the environment and the
social wellbeing of others a summary 
of the company’s approach to these issues
is set out on page 26 of the ofr
policy on payment of suppliers
mitchells  butlers plc is a holding
company and has no trade creditors 
the policy of its principal operating
subsidiaries is to agree particular terms
with major suppliers and abide by those
terms subject to satisfactory performance
by the supplier amounts owed to other
suppliers are settled in the month
following that in which the subsidiaries
receive a valid invoice 
charitable donations and 
charitable activity
the company continues to support
community initiatives and charitable
causes full details of which are given 
on page 26 of the ofr
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 2008 agm 
to make limited donations or incur 
limited political expenditure although 
it has no intention of using the authority
going concern
the financial statements which appear 
on pages 47 to 86 have been prepared 
on a going concern basis as after making
appropriate enquiries the directors 
have a reasonable expectation that the
group has adequate resources to continue
in operational existence for the
foreseeable future
annual general meeting
the notice convening the annual general
meeting to be held at 1100am on
thursday 31 january 2008 is contained 
in a circular sent to shareholders with 
this report at the meeting resolutions 
will be proposed to renew the authority 
to issue shares without applying statutory
preemption rights and to authorise the
company to make market purchases of its
own shares resolutions to make certain
amendments to the articles of association
are proposed to bring the company’s
articles of association in line with age
discrimination legislation and the
companies act 2006 in particular the
company is seeking the right to use
electronic means as the default method 
of communicating with its shareholders
for example by using the website for
delivery of the annual report and accounts
shareholders will be given the opportunity
to elect to receive a hard copy rather than
receive it by default as at present full
details of these resolutions are provided 
in the shareholder circular
auditors
ernst  young llp have expressed 
their willingness to continue in office 
as auditors of the company and their
reappointment will be put to shareholders
at the agm
the directors who held office as at the
date of approval of this directors’ report
confirm that so far as they are each aware
there is no relevant audit information 
of which the company’s auditors are
unaware and that each director has 
taken all steps that ought to have been
taken as a director to be aware of any
relevant audit information and to
establish that the company’s auditors 
are aware of that information
by order of the board
bronagh kennedy
company secretary
28 november 2007
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 30 mitchells  butlers
annual report and accounts 2007
corporate governance report
combined code compliance
the board recognises the importance 
of good corporate governance in creating
a successful sustainable and profitable
business it is committed to compliance
with the principles of corporate
governance as set out in the combined
code on corporate governance 
the ‘combined code’ and considers that
the company has complied throughout
the year ended 29 september 2007 with
all the provisions of the combined code
except where explained below
the board is responsible 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
combined code including clear operating
procedures lines of responsibility and
delegated authority these procedures have
been in place since the group was listed
and are regularly reviewed by the board
business performance is managed closely
and in particular the board and the
executive committee have established
processes as part of the normal good
management of the business to monitor
• strategic plan achievement through a
comprehensive series of strategic
reviews
• financial performance within a
comprehensive financial planning and
accounting framework
• capital investment and asset
management performance with detailed
appraisal authorisation and post
investment reviews 
• consumer insight data and actions to
evolve brands and formats to ensure that
they continue to be relevant and
• risk management through an ongoing
process which accords with the turnbull
guidance and provides assurance
through reports from group assurance
that the significant risks faced by the
group are being identified evaluated
and appropriately managed having
regard to the balance of risk cost and
opportunity
in addition the audit committee receives
• reports from group assurance on the
work carried out under the annual
internal audit plan and
• reports from the external auditors
through the monitoring processes set 
out above the board has conducted a
review of the effectiveness of the system 
of internal control during the year ended 
29 september 2007 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 the
review in the opinion of the board did
not indicate that the system was ineffective
or unsatisfactory and the board is not
aware of any change to this status up 
to the approval of this annual report
although the company is no longer
required to comply with the requirements
of the sarbanesoxley act to certify the
effectiveness of its financial controls the
directors remain fully committed to
ensuring that the group operates a good
control environment 
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 bearing 
in mind the availability of such cover its
cost and the likelihood and magnitude 
of the risks involved
board and committee structure
to support the principles of good
corporate governance the board and
committee structure operates as set 
out below
the board
the board consists of the parttime 
nonexecutive chairman four executive
and four independent nonexecutive
directors
there are nine board meetings currently
planned for 2008 and there were eight
scheduled meetings during 200607 
sir tim lankester and sara weller 
were each unable to attend one meeting
otherwise there was full attendance 
seven additional board meetings were
held during the year george fairweather 
tony hughes sir tim lankester and 
sara weller were each unable to attend
one of these additional meetings where 
a director was unable to attend a meeting
he or she was provided with all the papers
and information relating to that meeting
and was able to discuss issues arising with
the chairman and chief executive
the board is responsible to shareholders
for the strategic direction development
and control of the group it therefore
approves strategic plans and annual
capital and revenue budgets it reviews
significant investment proposals and the
performance of past investments and
maintains an overview 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 and human
resources are in place for the company 
to meet its objectives the board has
established a schedule of matters which
are reserved for its attention which are
published on the company’s website
the board has adopted objective written
criteria for the appointment of directors
and the roles of the chairman chief
executive and nonexecutive directors
have been defined in writing
the company secretary’s responsibilities
include ensuring good information flows
to the board and its committees and
between senior management and the 
nonexecutive directors the company
secretary is responsible through the
chairman for advising the board on all
corporate governance matters and for
assisting the directors with their
professional development as well as
facilitating the induction of directors 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 appointment and removal
of the company secretary is a matter
reserved for the board  31
directors
the following were directors of the
company during the year
appointed
roger carr chairman 100203
tim clarke chief executive 100203
mike bramley managing director 
pubs  bars 150403
george fairweather independent 
nonexecutive director 150403
tony hughes managing director 
restaurants 150403
karim naffah finance director 150403
sara weller independent 
nonexecutive director 150403
sir tim lankester independent 
nonexecutive director 160503
drummond hall independent 
nonexecutive director 300704
adam fowle was appointed to the 
board on 1 october 2007 and 
tony hughes will stand down from 
the board on 31 december 2007
directors’ biographical details are 
set out on page 28 of the annual review
and summary financial statement 2007 
and these include their main commitments
outside the company
the company ensures that directors
submit themselves for reelection at least
every three years 
mike bramley roger carr and drummond
hall will retire by rotation and offer
themselves for reappointment at the 2008
agm on 31 january as adam fowle was
appointed during the year he will also
stand for reappointment at the 2008 agm
more information about the directors
standing for reappointment is set out 
in the agm notice
details of the executive directors’ service
contracts are set out on page 40 the
chairman and the four independent 
nonexecutive directors have letters 
of appointment 
chairman
roger carr is chairman of the board and
has responsibility for the smooth running
of the board and for ensuring that all
directors are fully informed of matters
relevant to their roles he also ensures
that appropriate communication is
maintained with shareholders roger’s
external appointments include chairing 
a ftse 100 company and he is deputy
chairman of another on 20 april 2007
the company entered the ftse 100 
as a result the requirement in the
combined code that a chairman should
not chair more than one ftse 100
company is no longer met the
independent nonexecutive directors 
led by the senior independent director
specifically considered the impact of 
this and his continued contribution 
as part of the board effectiveness review
referred to on page 32 this confirmed
that he demonstrates through his energy
commitment wealth of experience and
dedication that he is more than capable
of devoting sufficient time to his role of
chairman of the company alongside his
other external appointments
the chairman separately met with the
nonexecutives without the executive
directors present as part of the board
effectiveness review
chief executive
tim clarke is the chief executive and 
has responsibility for implementing the
strategy agreed by the board and for 
the executive management of the group
he has authority to approve capital
expenditure projects up to a level
authorised by the board
senior independent director
drummond hall was appointed 
the senior independent director 
on 23 february 2007 sara weller was
senior independent director until then
drummond’s responsibilities include
being available to liaise with shareholders
who have issues to raise he is a member
of the remuneration committee 
the nomination committee and the 
audit committee 
nonexecutive directors
the company has experienced
independent nonexecutive directors 
who represent a strong source of advice 
and independent judgement in addition
to the chairman who was independent
upon his appointment there are 
four nonexecutive directors who 
the board considers to be wholly
independent other than their fees 
which are disclosed on page 39 the
independent nonexecutive directors
received no remuneration from the
company during the year when 
nonexecutive directors are considered
for appointment the nomination
committee will take into account their
other responsibilities in assessing whether
they can commit sufficient time to their
prospective directorship
all directors are briefed by use of
comprehensive papers circulated in
advance of board meetings and by
presentations at the meetings in addition
to receiving minutes of previous meetings
their understanding of the group’s
operations is enhanced by business
presentations and operational visits 
to the company’s businesses separate
strategy meetings and meetings with
senior executives are attended
committees
the committees of the board each have
written terms of reference approved by 
the board which are available on the
company’s website
audit committee
the audit committee which is chaired 
by george fairweather consists of the four
independent nonexecutive directors
the chairman of the board the chief
executive and the finance director attend
at the invitation of the committee’s
chairman during 200607 the committee
met four times
further details about the committee are
included in the audit committee report
on page 33
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 32
corporate governance report
remuneration committee
during the year the remuneration
committee which is chaired by sara 
weller comprised the four independent 
nonexecutive directors and the
chairman roger carr was appointed 
to the remuneration committee on 
1 october 2006 in line with revisions
made to the combined code during 
the year although the remuneration
committee noted that these changes come
into effect for financial years beginning 
on or after 1 november 2006 this
committee met six times during 200607
further details about the remuneration
committee are included in the
remuneration report on page 35
nomination committee
this committee consists of the chairman
of the board who chairs the committee
the four independent nonexecutive
directors and the chief executive the
company secretary is secretary to this
committee the terms of reference for
this committee are consistent with the
requirements of the combined code 
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 and reviewing the output of the
board effectiveness review it met three
times during the year to consider
succession planning and to recommend
the appointment of adam fowle to the
board although sir tim lankester and
george fairweather were each unable 
to attend one meeting they were
nevertheless provided with all the papers
and information relating to that meeting
and were able to discuss issues arising with
the chairman of the committee 
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 a director it attends to
business of a routine nature and to the
administration of matters the principles
of which have been agreed previously by
the board or an appropriate committee
executive committee
the executive committee which is
chaired by the chief executive consists 
of the executive directors and certain
other senior executives as shown on 
page 29 of the annual review and
summary financial statement 2007
the executive committee meets every
four weeks and has everyday 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 manpower
planning and succession plans
board effectiveness evaluation
an internal evaluation of the board’s
effectiveness was carried out shortly after
the year end which included a review 
of the performance of the chairman 
and of the individual directors the
evaluation considered the processes 
of the board and its committees and the
range and balance of skills demonstrated
by the executive and nonexecutive
directors it also reviewed the directors’
involvement in strategic operational 
and financial matters and their exposure
to senior managers output from the
board effectiveness review is considered 
by the nomination committee to ensure 
that an appropriate balance of skills
knowledge and experience is represented
on the board and that the board and its
committees continue to work effectively 
independent advice
members of the board may take
independent professional advice in the
furtherance of their duties and they have
access to the advice and services of the
company secretary
shareholder relations
the board recognises that it is
accountable to shareholders for the
performance and activities of the
company the company has a regular
programme of meetings with its major
institutional shareholders which provides
an opportunity to discuss on the back 
of publicly available information the
progress of the business the chairman
the chief executive and the finance
director report to the board the views of
major shareholders about the company
and the senior independent director 
and other nonexecutive directors are
available to shareholders on request
institutional investors and analysts are 
also invited to briefings by the company
after the announcement of its interim and
preliminary results the content of these
briefings is posted on the company’s
website together with general information
about the company so as to be available
to all shareholders presentations are also
made to groups of individual shareholders
the agm provides a useful interface 
with private shareholders many of 
whom are also customers 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 the chairmen of the 
audit remuneration and nomination
committees attend to answer questions
mitchells  butlers
annual report and accounts 2007 33
the company’s audit committee has met
the requirements of the combined code
on corporate governance throughout 
the year a copy of the audit committee’s
terms of reference is publicly available
within the investor section of the
company’s website
role of the audit committee
the audit committee’s principal
responsibilities are to
• review the company’s public statements
on internal control and corporate
governance compliance prior to their
consideration by the board
• review the company’s processes 
for detecting fraud misconduct and
control weaknesses and to consider 
the company’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 auditors any financial
statements required under uk
legislation before submission to 
the board
• establish review and maintain the 
role and effectiveness of the group
assurance function
• assume direct responsibility for 
the appointment compensation
resignation dismissal and the
overseeing of the external auditors
including review of the external audit
its cost and effectiveness
• preapprove nonaudit work to be
carried out by the external auditors and
the fees to be paid for that work along
with the monitoring of the external
auditors’ independence
• oversee the process for dealing with
complaints received by the group
regarding accounting internal
accounting controls or auditing matters
and the confidential anonymous
submission by employees of concerns
regarding questionable accounting or
auditing matters and
• adopt and oversee a specific code 
of ethics for the executive directors 
the executive committee and all other
senior officers which is consistent with
the company’s overall statement of
business ethics
audit committee composition
the audit committee is chaired by
george fairweather who as a chartered
accountant and the finance director of a
former ftse 100 company has current
and relevant financial experience and is
considered to be the committee’s financial
expert the committee’s other members
are drummond hall sir tim lankester
and sara weller the committee wishes 
to retain the knowledge experience and
judgement of the chairman of the board
but reflecting recommendations within
the smith guidance roger carr is not 
a member of the committee but attends
at the invitation of the committee’s
chairman the committee regularly
invites the external auditors the chief
executive the finance director and 
the director of group assurance to its
meetings discussions are however held 
in private when appropriate all of the
committee’s members are independent
nonexecutive directors
audit committee frequency
the committee meets at least four 
times a year during 200607 four full
meetings of the committee were held
there was full attendance at all these
meetings other than one at which sara
weller and one at which sir tim lankester
were unable to attend on those occasions
all the papers and information relating 
to the meetings were provided and they
were able to discuss issues arising with the
committee chairman 
audit committee process
the committee discharges its
responsibilities as defined in its terms 
of reference through a series of audit
committee meetings throughout the year
at which detailed reports are presented 
for review the committee commissions
reports either from external advisers the
director of group assurance or company
management after consideration of the
company’s major risks or in response to
developing issues the committee meets
privately with the external auditors and
the director of group assurance at least
four times a year and liaises with
company management in considering
areas for review
during the year the committee’s
meetings considered the following
matters
• interim and full year financial results
• the company’s proposed approach 
to interim management statements 
• the scope and cost of the external audit
• nonaudit work carried out by the
external auditors and trends in the 
nonaudit fees in accordance with 
the committee’s policy to ensure the
safeguard of audit independence
• the scope of the annual internal audit
plan the internal audit department’s
terms of reference its resourcing and
external support
• the external auditors’ interim and full
year reports
• periodic internal control and assurance
reports from the internal audit function
• the effectiveness of the external
auditors and consideration of their
reappointment
• periodic reports on allegations made via
the group’s whistleblowing procedures
and the effectiveness of these procedures
• the effectiveness of the internal audit
function
• the resignation and steps taken to
replace the director of group
assurance
• management representations granted 
to the external auditors and the
company’s procedures to ensure all
relevant audit information has been
disclosed
• major changes in the group’s internal
controls
audit committee report
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 34
audit committee report
• the coordination of the internal and
external audit functions
• the group’s framework for the
identification and control of major 
risks its risk and assurance register
and the annual assessment of control
effectiveness
• compliance with the code of ethics for
the executive directors the executive
committee and all other senior officers
• corporate governance developments
• review of the steps taken by the group
to achieve sec deregistration
• review of the suitability of the group’s
accounting policies and practices
• the status of litigation involving 
the group and
• the committee’s own terms of
reference membership and its
effectiveness
the company’s public financial
statements are reviewed by the audit
committee in advance of their
consideration by the board adequate
time is allowed between the committee’s
review and the board’s approval for any
actions or further work requested by the
committee to be completed
evaluations of the committee in the year
have been performed with the assistance
of the director of group assurance 
external auditors’ independence
the audit committee has adopted a
policy on the utilisation of the external
auditors for nonaudit work that is in
compliance with the combined code 
the external auditors may carry out
certain specified nonaudit work in 
areas that have been preapproved by 
the committee up to a monetary limit 
of half the audit fee per transaction 
and subject to an annual total cap of no
more than the audit fee any other work
for which management wishes to utilise 
the external auditors must be approved 
by the committee in this regard the
audit committee specifically considered
and approved management’s request to 
utilise ernst  young for one transaction
during the year where management felt
ernst  young were best placed to provide
the service 
approved by the board
george fairweather
chairman of the audit committee
28 november 2007
mitchells  butlers
annual report and accounts 2007 35 mitchells  butlers
annual report and accounts 2007
this report has been prepared by the
remuneration committee the ‘committee’
and has been approved by the board it
complies with the companies act 1985
and also with the combined code on
corporate governance the ‘combined
code’ and with the ukla listing rules
throughout this report references to 
the year are to the 52 week period ended
29 september 2007 this report will be
put to shareholders for approval at the
forthcoming annual general meeting 
to be held on 31 january 2008
the remuneration committee
throughout the year the committee
consisted of the following nonexecutive
directors
• sara weller 
• roger carr
• george fairweather
• drummond hall
• sir tim lankester 
sara weller is chairman of the
committee she has experience of human
resources matters and has the appropriate
skills to chair the committee she does
not chair any other committee of the
board as noted last year roger carr 
was appointed to the committee from 
1 october 2007
there were six meetings of the committee
held during the year george fairweather
was unable to attend two meetings
otherwise there was full attendance 
where a director was unable to attend 
a meeting he was nevertheless provided
with all the papers and information
relating to that meeting and was able to
discuss issues arising with the chairman 
of the committee tim clarke the chief
executive attended the meetings of the
committee during the year at the invitation
of its chairman no executive director
attended on matters relating to his own
remuneration
no member of the committee has any
personal financial interest other than as a
shareholder in the matters to be decided
by the committee the remuneration of
the nonexecutive directors is decided 
by the board as a whole on advice from
the executive directors supported by
independent remuneration advisers to 
the company 
the committee received external advice
during the year from remuneration
consultants deloitte  touche llp
‘deloitte’ and watson wyatt as well 
as from allen  overy the company’s
general legal advisers the committee
took advice from tim clarke the chief
executive bronagh kennedy human
resources director and general counsel
and sheila mellish director of
compensation  benefits none of these
participated in discussions concerning
their own remuneration following a
review of advisers deloitte was
independently appointed by the
committee as its adviser from may 2007
deloitte advises the company on general
tax matters and has previously advised on
nonexecutive directors’ fees it has not
provided remuneration services to the
company since appointment as adviser to
the committee
the terms of reference of advisers to the
committee are on the company’s website
as are the terms of reference of the
committee itself
the committee is responsible for
determining policy on remuneration
including pension rights and should 
it be necessary compensation payments
for the executive directors other
members of the executive committee 
and certain senior executives and for
reviewing the chairman’s fees the
committee is committed to the principles
of accountability and transparency to
ensure that remuneration arrangements
demonstrate a clear link between reward
and performance it determines the actual
remuneration of the executive directors
and reviews proposals in respect of other
members of the executive committee
taking account of a range of factors
including percentage increases awarded
across the group as a whole for the year
under review the total emoluments
including benefits in kind earned by those
members of the executive committee who
were employed in the group at the year
end and who were not main board
directors are shown in the table below
no of executives £000
1 301350
3 351400
2 401450
1 501550
the rest of this report deals with the
remuneration of the executive and 
nonexecutive directors only
remuneration policy for executive
directors
the following overall policy has applied
throughout the year and is intended 
to continue to apply for the financial 
year 2008
• remuneration packages are designed 
to attract retain and motivate executive
directors of the highest calibre
• the packages will be competitive within
the leisure retailing industry and in
those markets from which the
organisation recruits
• in fixing remuneration note will be
taken of reward levels in the wider
community and of the remuneration
structure throughout the organisation
• there will be an appropriate balance
between fixed and variable risk reward
the latter will be linked to the
performance of both the individual and
of the group and
• basic salary will normally be set within 
a competitive range broadly at median
market level when compared with
appropriate comparator companies but
by exception may extend into the upper
quartile to attract new employees and
reward key individuals for consistent
outstanding performance 
overall reward levels depend on the
achievement of challenging corporate 
and individual performance targets
designed to underpin the achievement 
of the company’s strategic goals 
ensuring continued close alignment
between executive reward and enhanced
shareholder value to this extent the
committee reviews on an ongoing basis
the operation of its incentive schemes
including the exercise of discretion grant
levels performance criteria and vesting
schedules to ensure that they remain
appropriate 
the company measures its performance
against its strategy through four key
performance indicators ‘kpi’s being
1 same outlet likeforlike sales growth
2 earnings per share ‘eps’ growth
3 cash return on cash capital employed
‘crocce’ in excess of the weighted
average cost of capital post tax
‘wacc’
4 incremental return on expansionary
capital
as outlined in the ofr total shareholder
return ‘tsr’ is also an important
measure of performance and this measure
forms one of the performance conditions
for the performance restricted share plan
these kpis and their alignment to
remuneration policy are summarised
overleaf and are discussed in more detail
in the ofr on page 12
remuneration report
reports accounts shareholder
information
operating 
and financial
review
overview 36 mitchells  butlers
annual report and accounts 2007
remuneration report
components of remuneration packages
summary of components of remuneration packages
basic salary shortmediumterm
incentive
longterm 
incentive
annual bonus 

deferred shares
stdip
performance shares
prsp 

share options 
exsop
no further options 
under the exsop
were granted following
the 2006 agm
using target or
projected value
calculations
fixed performancebased
circa 60 circa 40
these principles of alignment are cascaded as appropriate to executives below board level
incentivises increase in cash returns generated by
the business and reduction in overall cost of
funding
aligns interests of executive directors and
shareholders
up to 177 of base salary total shareholder
return against an
industry specific
comparator group
average excess of
cash return on cash
capital employed over
the weighted average
cost of capital
total shareholder
return against an
industry specific
comparator group
average excess of
cash return on cash
capital employed over
the weighted average
cost of capital
reflects competitive market level for the role and
individual contribution
benchmarked against ftse all share index and
relevant subsector comparator group
individual contribution individual contribution
performance restricted share plan ‘prsp’
basic salary
incentivises growth in eps and share price
aligns interests of executive directors and
shareholders
deferred shares matched 11 subject to
achievement of a performance condition dividend
accrued shares will be awarded on the value of
ordinary dividends accruing on vested shares
growth in eps over
rpi over a three year
performance period
short term deferred incentive plan ‘stdip’
growth in eps over
rpi over a three year
performance period
motivates achievement of annual business kpis
and delivery of eps target
55 of salary ‘on target’ bonus 100 of salary
maximum bonus payable in cash or shares at the
discretion of the committee
earnings per share
75 and personal
and group business
objectives 25
these objectives are
based on a number 
of measures including
likeforlike sales
growth and return 
on investment
earnings per share
75 and personal
and group business
objectives 25
these objectives are
based on a number 
of measures including
likeforlike sales
growth and return 
on investment
annual performance bonus
purpose grant policy performance measures
200607 200708
the main components of executive
directors’ remuneration have to date 
been as shown in the diagram alongside
shares arising from share schemes 
should not normally be sold until the
minimum level of ownership as described
on page 39 has been satisfied
the committee monitors the size 
of potential remuneration awards 
to directors and uses independent
consultants to assist with modelling
potential outcomes
of the components of the remuneration
package only basic salary is pensionable 37 mitchells  butlers
annual report and accounts 2007
basic salary
basic salary will normally be set within a
competitive range broadly at median
market level as previously reported from
2007 onwards the committee decided
that by exception basic salary may extend
into the upper quartile to attract new
employees and reward key individuals for
consistent outstanding performance basic
salary is based on individual performance
and on information from independent
professional sources on the salary levels
for similar jobs in comparator companies
salary levels in the group and in the
wider employment market are also taken
into account
the proportion of the group’s basic salary
bill attributable to the executive directors
and other members of the executive
committee was 08 2006 08
the average basic salary of the executive
directors on the basis that no shortterm
bonus was paid during the year was
£419250 2006 £710250 and the
average per nonboard employee was
£13686 2006 £13387 the ratio is
therefore 131 2006 153 the board and
the remuneration committee do not have
a policy on this ratio but aim to reward all
employees fairly according to the nature
of their role their performance and
market forces 
in the year under review the average 
base salary increase for members of the
executive committee which includes 
the executive directors was 34 whereas
the average increase for other employees
including retail staff and management
was 23
annual performance bonus and short
term deferred incentive plan 
the purpose of the annual bonus and
stdip is to reward participants for
performance over the previous financial
year and provide an element of retention
through a matching share award going
forwards
participation is considered each year at
the discretion of the committee
challenging performance goals are set
which must be achieved before a bonus
becomes payable for 200607 the
maximum bonus opportunity has been
100 of salary of which for the year to 
29 september 2007 75 was linked to
earnings per share and 25 to personal
and group business objectives at the
discretion of the committee the bonus is
payable either in cash or in shares under
the stdip as set out below 
during the year certain hedging
instruments ‘hedges’ were taken out in
anticipation of implementing a property
backed refinancing these hedges have
given rise to a noncash deficit at the 
year end as it is uncertain whether this
noncash deficit will crystallise and 
if so the extent to which it will affect the
financial performance of the company 
the executive directors have voluntarily
offered to freeze final consideration of
whether a bonus should be paid in respect
of the year to 29 september 2007 pending
a review by the remuneration committee
at the forthcoming half year or later if
appropriate 
under the stdip  any award of bonus
shares is deferred for three years and if
the executive director is in the company’s
employment at the end of that period the
company will provide matching shares on
a 11 basis under the rules of the stdip 
the remuneration committee has
discretion to award matching shares on 
a pro rata basis and subject to satisfaction
of the performance condition to good
leavers as defined by the plan rules
vesting of matching shares takes place
subject to the achievement of a three 
year performance condition there is no
retesting of the performance condition
over the three year period 
as it has not yet been determined whether
it is appropriate to make payment of the
executive directors’ bonuses in respect of
the financial year 200607 as explained
above there may also be no award of
bonus or matching shares
where matching shares have been
awarded the performance condition has
been based on eps growth 
for the award in respect of the financial
year 200405 the performance condition
is based on growth in eps such that
cumulative eps over the three year
performance period must increase by at
least 27 points over the growth in rpi
before matching shares can vest in full
the vesting of matching shares will be 
on a sliding scale according to the level 
of eps growth no matching shares will 
be released unless eps growth over the
performance period exceeds rpi growth
by at least 12 points
for the award in respect of the financial
year 200506 the performance measure 
is as described above except that the
performance condition is based on
average eps growth in excess of rpi over
the performance period
eps growth has been chosen because it 
is a measure which reflects movement 
in shareholder value the company’s
auditors review and certify performance
against the target
where an award is made participants are
entitled to receive dividend accrued
shares on vesting equal to the value of the
gross ordinary dividends that would have
been paid on the vested shares during the
performance period 
reports accounts shareholder
information
operating 
and financial
review
overview 38 mitchells  butlers
annual report and accounts 2007
remuneration report
performance restricted share plan 
the prsp grants executive directors 
at the discretion of the committee cash
or nominal priced options over shares
subject to the satisfaction of a performance
condition set by the committee which 
is measured over a three year period
participants are entitled to receive dividend
accrued shares on vesting equal to the
value of the gross ordinary dividends that
would have been paid on the vested shares
during the performance period
currently three cycles are being operated
in respect of the periods 200407 200508
and 200609 each with two performance
conditions based on 
• total shareholder return and 
• cash return on cash capital employed
exceeding the weighted average cost 
of capital post tax
prsp performance cycle to september
2009 – summary of performance
conditions
minimum maximum
vesting vesting
tsr 50 equal to equal to
5th place 1st place
20 vesting 100 vesting
average crocce excess of 40 excess of 55
vs wacc 50 20 vesting 100 vesting
tsr was chosen as a measure because it
aligns the interest of management with
that of shareholders the crocce versus
wacc measure was chosen to incentivise
the executive directors to increase the
cash returns generated by the business
and to reduce the overall cost of funding
to the company thereby maximising the
spread between the two and increasing
shareholder value 
performance measurement under the
prsp is reviewed and certified by the
company’s auditors
tsr measure
for each cycle 50 of the award is
measured by reference to tsr performance
against a comparator group of other
companies which at the date of award
consisted of
cycle to cycle to cycle to
company sep 2007 sep 2008 sep 2009
enterprise inns • • •
fuller smith and turner • • •
greene king • • •
j d wetherspoon • • •
luminar • • •
punch taverns • • •
regent inns • • •
the restaurant group • • •
whitbread • • •
marstons • • •
gondola holdings • •
formerly known as wolverhampton  dudley
gondola holdings was added to the comparator
group for the cycles to september 2008 and
september 2009 following its listing in 2005 and
removed following its delisting at the end of 2006
for the three year cycle ending september
2007 the company had to finish in first
to fifth position for an award to vest
graded between 100 of the tsr element
of the award for first position to 20 
for fifth position below fifth position 
the award relating to tsr lapses the
company finished in second position so
80 of this element of the award will vest 
for the three year cycles ending
september 2008 and september 2009 
the company has to finish in first to fifth
position for an award to vest below fifth
position the award relating to tsr lapses
croccewacc measure
the vesting of the other 50 of the award
is based on the average amount by which
the company’s crocce exceeds wacc
over the performance period the award
for this element of the performance
measure is graded so that for the three
year cycle ending september 2007 if the
amount by which the crocce exceeds
the wacc over the performance period is
at least 50 points 100 of the crocce
element of the award will vest whereas 
if the excess is 35 points 20 of the
award will vest in between 35 points
and 50 points the award will be graded
on a straight line basis below 35 points
there will be no award in respect of this
element the excess of crocce over
wacc for the cycle to september 2007
was 447 points therefore 717 of this
element of the award will vest
for the three year cycles ending
september 2008 and september 2009 
the vesting of the other 50 is based on
the excess of crocce over wacc as
described above except that for the cycle
to september 2009 if the amount by
which the crocce exceeds the wacc
over the performance period is at least
55 points 100 of the crocce
element of the award will vest whereas 
if the excess is 40 points 20 will vest
executive share option plan ‘exsop’
grants of exsop options were made
annually up to june 2005 no further
grant is intended to be made under this
plan grants were made at the discretion
of the committee according to seniority
the maximum value in any one year being
two times salary a performance condition
set by the committee has to be met
before the options may be exercised for
options granted in 2005 the performance
measure is that cumulative adjusted eps
over the three year performance period
from 1 october 2004 to 30 september
2007 must increase by at least 27 points
over the growth in rpi before the options
can be exercised in full as this performance
condition has been achieved 100 of the
options will become exercisable three years
after the date of grant the performance
measure under the exsop was reviewed
and certified by the company’s auditors 
the latest lapse date under this plan for
options previously granted is june 2015 
rolledover legacy options
on demerger from six continents 
the group’s executives including the
executive directors with outstanding
options under the six continents
executive share option schemes were
permitted to roll over those options into
options of equivalent value over the
company’s shares the performance
conditions ceased to apply to those options
on demerger the latest lapse date for
these legacy options is in october 2012
other share plans
executive directors may participate in the
allemployee share plans the sharesave
plan and the share incentive plan
performance targets do not apply to such
plans no grant of options was made
under the sharesave plan to any director
during the year 39 mitchells  butlers
annual report and accounts 2007
companies used for comparison in
respect of overall pay and benefits 
in assessing overall levels of pay and
benefits mitchells  butlers takes 
into account the packages offered by
comparator companies to improve the
consistency and relevance of the data 
the approach to benchmarking has with
advice from deloitte been reviewed this
year to ensure that the methodology
remains relevant to the structure of the
business and properly reflects the markets
from which the organisation recruits the
overall levels of pay and benefits will be
assessed by reference to market practice 
in both the ftse all share index as well
as relevant sector specific comparators
the methodology and the comparator
companies are chosen by the committee
following advice from independent
external consultants having regard to
• industry sector to include direct
competitors and the wider retail sector
• size – financial size and the number of
people employed and
• the structure and complexity of the
business
ftse 100 and ftse 250 comparators
from its listing on 15 april 2003 until 
21 december 2003 the company was a
constituent of the ftse 100 index from
22 december 2003 until 20 april 2007
the company was included in the ftse
250 index since then it has been
included in the ftse 100 index the
graph below therefore measures the
company’s tsr performance assuming
dividends are reinvested against both the
ftse 100 and 250 indices
tsr has been calculated in accordance
with the requirements of the companies
act 1985 except that the period covered 
is only since the company’s listing in 
april 2003
directors’ shareholdings
to support the company’s commitment 
to ensure that directors’ interests are
aligned to those of shareholders there is 
a mandatory shareholding of three times
salary for the chief executive and twice
salary for other executive directors 
it is the policy of the remuneration
committee that for any future executive
director appointment the mandatory
shareholding requirement may be reduced
to one times salary subject to this
continuing to be reflective of market
practice at that time notwithstanding 
this policy it has been decided that 
adam fowle will be required to attain a
shareholding of twice his annual salary
within five years of his appointment as 
an executive director effective from 
1 october 2007 apart from this 
adam fowle’s remuneration package is
consistent with the remuneration policy
outlined on page 35 of this report 
each of the incumbent executive directors
had at 29 september 2007 achieved the
mandatory shareholding to ensure that
their interests are aligned with those of
shareholders as set out below 
shareholding as a 
director multiple of salary
tim clarke 91 x
mike bramley 68 x
tony hughes 75 x
karim naffah 52 x
based on the share price on 28 september 2007 
of 6110p
nonexecutive directors
nonexecutive directors are paid 
a basic fee with additional fees for
membership of the remuneration and
audit committees and for chairing those
committees no additional fee is paid 
for membership of the nomination
committee the fees are approved 
by the board on the recommendation 
of the executive directors based on a
review of the fees paid in other companies 
of a similar size fees are normally
reviewed every three years a review of
these fees was last carried out in april
2006 nonexecutive directors do not
participate in the company’s bonus
arrangements share schemes or pension
arrangements the fee structure
applicable throughout the financial year 
is set out below
committee committee
basic fee chairman fee member fee
£35500 £7500 £6000
applicable to remuneration and audit committees
only
mitchells  butlers’ tsr versus 
ftse 100 and ftse 250 150403 – 300907
0
100
200
300
400
sep 07 sep 06 sep 05 sep 04 sep 03
mitchells  butlers tsr
ftse 250 
ftse 100 
reports accounts shareholder
information
operating 
and financial
review
overview 40 mitchells  butlers
annual report and accounts 2007
policy on directors’ contracts
it is the company’s normal policy to
provide executive directors with rolling 
12 month contracts which provide for 
12 months notice from the company 
and six months notice from the director
service contracts provide for summary
termination in the event of gross
misconduct in other circumstances 
any severance payment would normally 
be based on a valuation of net pay and
benefits for any unexpired notice period
in the expectation that the director has
made reasonable attempts to mitigate 
his loss there are no compensation
provisions in relation to a change of
control of the company benefits normally
include membership of a pension scheme
a healthcare scheme and the use of a
company car in 2006 the remuneration
committee decided to introduce for 
new appointees to the board contracts
that provide for phased compensation
payments on loss of office this reflects
developing best practice and has been
applied in respect of adam fowle’s
appointment on 1 october 2007 
contract
start unexpired notice
director date term period
tim clarke 150403 indefinite 12 months
mike bramley 150403 indefinite 12 months
tony hughes 150403 indefinite 12 months
karim naffah 150403 indefinite 12 months
to retirement age at 60 tony hughes will leave
mitchells  butlers by reason of early retirement
aged 59 on 31 december 2007
no payments including compensation 
on early termination should normally 
be payable on termination other than 
the salary and benefits due for the notice
period and such entitlements under
incentive plans that are consistent with the
terms of such plans any entitlement under
incentive plans will vest or lapse subject 
to the discretion of the remuneration
committee in accordance with the terms
of such plans
nonexecutive directors do not have
service contracts but operate under a
letter of appointment which provides for
their tenure of office to be reviewed when
they are about to stand for reelection
which is every three years in any event
nonexecutive directors may not
currently serve after the agm following
their 67th birthday there is no notice
period and no provision for termination
payments 
the dates of appointment of the 
nonexecutive directors are set out on
page 31 
pension arrangements
ukbased executive directors and senior
employees participate with other members
in the mitchells  butlers executive
pension plan the ‘plan’ and if
appropriate the mitchells  butlers
executive topup scheme ‘mabetus’
executives in germany who do not
participate in these plans are entitled to
participate in relevant local plans the
remuneration committee has considered
the implications of the pensions
regulations contained within the finance
act 2004 effective from april 2006 the
mabetus will remain in place and will
be used to provide benefits for members
of the defined benefit plan who were
above the earnings cap the ‘cap’ on 
5 april 2006 and for members whose
pension benefit is above the lifetime
allowance which limits the amount of
benefits that receive preferential tax
treatment under a pension arrangement
which has ‘registered’ status with 
hm revenue  customs mabetus is 
an unfunded unregistered arrangement
however appropriate security is provided
through a charge on property assets 
this decision does not alter the cost to the
company of providing pension benefits
no extra payment has been or is planned
to be made to any individual as a result of
the new legislation
the plan is a funded occupational pension
scheme which has ‘registered’ status with
hm revenue  customs and therefore 
is subject to preferential tax treatment
compared to unregistered schemes such 
as mabetus the plan has a final 
salary section under which the executive
directors can accrue benefits benefits up
to the cap are provided by the plan and
mabetus is used to provide benefits 
in excess of the cap mike bramley has
entitlement to benefits in excess of his
lifetime allowance which are also
provided by mabetus 
the plan’s main features applicable to the
executive directors are
• a normal pension age of 60
• pension accrual of up to 130th of final
pensionable salary for each year of
pensionable service
• life assurance cover of four times
pensionable salary
• pensions payable in the event of ill
health and
• on death pensions based on onethird
full pension entitlement for a spouse
and onesixth for each of a maximum 
of two eligible children
on the death of a director before his
normal pension age a spouse’s pension
equal to onethird of the director’s
pension is payable a child’s pension 
of onesixth of the director’s pension 
is payable for each of a maximum of 
two eligible children
early retirement 
a member who decides to leave the
service of the company currently has the
right to draw his accrued pension at any
time after his 50th birthday subject to a
discount for early payment
pension increases
all pensions in excess of guaranteed
minimum pensions are subject to annual
increases in line with the annual rise in
the rpi subject to a maximum of 5 per
annum in addition it is the company’s
present aim to pay additional increases
based on twothirds of any rise in the 
rpi above 5 per annum
other discretionary benefits
other than the discretionary pension
increases mentioned above there are no
discretionary practices which are taken
into account in calculating transfer values
on leaving service
external listed company appointments
the company recognises that its
executive directors may be invited to
become nonexecutive directors of other
listed companies and that such duties 
can broaden experience and knowledge
which will benefit the company executive
directors are therefore allowed to accept
one such nonexecutive appointment with
the company’s prior approval and as long
as this is not likely to lead to conflicts of
interest fees received may be retained by
the director tim clarke is a nonexecutive
director of associated british foods plc
and received £45875 2006 £44000
during the year for that appointment
the tables and related disclosures on the
stdip  prsp  share options share incentive
plan and pension benefits have been audited 
by ernst  young llp 
remuneration report 41 mitchells  butlers
annual report and accounts 2007
remuneration report
supplementary information 
on directors’ remuneration
directors’ emoluments
total emoluments
basic annual
excluding pensions
salaries and performance 2007 2006
fees bonus benefits 52 weeks 52 weeks
£000 £000 £000 £000 £000
executive directors
tim clarke 538 – 22 560 951
mike bramley 374 – 21 395 643
t ony hughes 374 – 25 399 645
karim naffah 386 – 13 399 677
nonexecutive directors
roger carr 224 – – 224 209
george fairweather 55 – – 55 51
drummond hall 47 – – 47 44
sir tim lankester 47 – – 47 44
sara weller 55 – – 55 51
t otal 2007 2100 – 81 2181
t otal 2006 2015 1222 78 3315
final consideration of whether a bonus should be payable in respect of the year to 29 september 2007 has been frozen pending a review by the committee
drummond hall’s fees were paid to his former employer dairy crest group plc until his retirement from that company on 31 december 2006
the figures above represent emoluments earned during the periods shown there were no payments for loss of office
‘benefits’ incorporate the value of all tax assessable benefits arising from employment with the company which primarily relate to
the provision of a company car and healthcare cover
annual performance bonus
subject to final consideration by the committee as set out above the bonus which would have been earned but has been frozen in
respect of each executive director for 200607 is as follows
maximum group and
bonus bonus eps target personal 
achievable earned achieved objectives
director £000 £000 £000 £000
tim clarke 543 462 362 100
mike bramley 380 323 253 70
t ony hughes 380 276 253 23
karim naffah 390 332 260 72
to achieve maximum bonus directors had to meet targets related to
• the company’s earnings per share performance and
• group and personal business objectives
group business objectives related to
• improvement in likeforlike sales
• staff productivity
• guest satisfaction
• effective purchasing
• return on investment 
• asset management and
• return on the acquired sites
personal business objectives related to the financial performance of the business area for which the director was directly responsible
reports accounts shareholder
information
operating 
and financial
review
overview 42 mitchells  butlers
annual report and accounts 2007
remuneration report
supplementary information 
on directors’ remuneration
salary
the normal salary review date is 1 january as at 29 september 2007 and 28 november 2007 the basic annual salaries of executive
directors were as shown below 
290907 and
281107
director £000
tim clarke 543
mike bramley 380
adam fowle from 011007 350

t ony hughes 380
karim naffah 390
next review is scheduled to be effective from 1 january 2009
short term deferred incentive plan 
the table below shows the maximum matching shares received or receivable based on some or all of the directors’ annual
performance bonuses from 2003 onwards being deferred into share awards 
carried forward as at 300906 awarded in fy 2007
total total
value of number of number of
value of number of share price matching matching matching total
number of share matching earliest matching on award shares shares shares yet share value at
matching price at shares vesting shares date awarded vested in to vest at price at 290907
director shares year end £000 date awarded 051206 £000 year 290907 290907 £000
tim clarke 86758 5895p 511 071207 44187 7215p 319 28852 102093 6110p 624
mike bramley 73422 5895p 433 071207 19455 7215p 140 16269 76608 6110p 468
t ony hughes 83084 5895p 490 071207 38910 7215p 281 18891 103103 6110p 630
karim naffah 61404 5895p 362 071207 21121 7215p 152 20314 62211 6110p 380
from fy 2006 all awards of matching shares have a performance condition these are described on page 37 the earliest vesting
date for the awards made in fy 2006 ie in december 2005 is december 2008 and the earliest vesting date for the awards made in
fy 2007 ie in december 2006 is december 2009
the table below shows details of the matching shares that vested during the year the number of shares vested were released subject
to tax and ni
market
number of share share value on net shares
matching award price on vesting price on vesting date received after
director shares date award date date vesting date £000 tax and ni
tim clarke 8894 091203 23575p 111206 71925p 64 5240
19958 071204 32225p 071206 72000p 144 11758
mike bramley 5781 091203 23575p 111206 71925p 42 3406
10488 071204 32225p 071206 72000p 76 6179
t ony hughes 5781 091203 23575p 111206 71925p 42 3406
13110 071204 32225p 071206 72000p 94 7724
karim naffah 6226 091203 23575p 111206 71925p 45 3668
14088 071204 32225p 071206 72000p 101 8300
the potential total gross gain made in the year by all directors had they sold all their shares when they vested was £606947 
2006 £332291
performance restricted share plan 
participation in the prsp is by means of an option which is exercisable for nominal consideration once the performance condition
has been satisfied 
in 2007 there were three cycles of the plan in operation each with a three year performance period as outlined below
• october 2004 to september 2007 
the combined maximum award from the two measures is equivalent to 90 of basic salary at the date of the award
• october 2005 to september 2008 
the combined maximum award is as approved by shareholders at the 2006 agm equivalent to 177 of basic salary at the date 
of the award this change was applied in conjunction with the discontinuance of the exsop and
• october 2006 to september 2009
the combined maximum award is also equivalent to 177 of basic salary at the date of the award
details of the two performance measures are set out on page 38 43 mitchells  butlers
annual report and accounts 2007
the maximum number of shares available subject to tax and ni if all performance targets are achieved is
maximum maximum maximum
potential share potential potential
shares as at lapsed vested exercised price on granted shares as at award as at earliest
300906 in year in year in year date of in year 290907 290907 vesting latest
director shares shares shares shares exercise shares shares £000 date lapse date
tim clarke 586978 61337 143117 143117 68461p 140014 522538 3193 301107 301111
mike bramley 393220 40290 94008 94008 68461p 95104 354026 2163 301107 301111
t ony hughes 393220 40290 94008 94008 68461p 95104 354026 2163 301107 301111
karim naffah 417784 43296 101024 101024 68461p 100388 373852 2284 301107 301111
granted on 1 december 2006 share price at date of grant was 6850p
based on the share price on 28 september 2007 of 6110p
the potential total gross gain made in the year by all directors had they sold all their shares when they vested was £2958586 
2006 £1022297
directors’ share options
market
share
ordinary shares under option weighted price of price on
average option date of earliest last
option exercised exercise exercise expiry
director 300906 granted vested
1
exercised 290907 price p p p date date
tim clarke
a 949037 – 403960 456620 896377 26431 21900 69442 – 240514
b 732303 – 403960 – 328343 32159 – – 240508 240515
total 1681340 – – 456620 1224720 27967
mike bramley
a 605777 – 265346 296800 265346 25250 21900 69442 – 240514
– – – 58842 – – 28668 69442 – –
– – – 10469 – – 28668 69442 – –
– – – 101044 – – 25973 69442 – –
– – – 131942 – – 26674 69442 – –
– – – 1948 – – 30590 69442 – –
– – – 4732 – – 36446 69442 – –
b 480004 – 265346 – 214658 32610 – – 240508 240515
total 1085781 – – 605777 480004 28541
t ony hughes
a 683996 – 270819 296800 265346 25250 21900 69442 – 240514
– – – 120251 – – 25973 73510 – –
– – – 154489 – – 26674 73510 – –
– – – 34516 – – 28668 73510 – –
– – – 34795 – – 30590 73510 – –
– – – 43145 – – 36446 73510 – –
– – – 5473 – – 16900 58850 – –
b 485477 – 270819 – 214658 32610 – – 240508 240515
total 1169473 – – 689469 480004 28541
karim naffah
a 510862 – 285148 23382 763443 23998 28668 69442 – 240514
b 516581 – 285148 9185 231433 32382 36446 69442 240508 240515
total 1027443 32567 994876 25948
1
during the year ended 29 september 2007 options granted in may 2004 under the exsop vested for each of the executive directors the number of shares under
option that vested during the year have moved from row b to row a
indicates the exercise of rolledover legacy share options
shares under option at 29 september 2007 are designated as
a where the options are exercisable and the market price per share was above the option price at 28 september 2007 and
b where the options are not yet exercisable and the market price was above the option price on 28 september 2007
the potential total gross gain made in the year by all directors had they sold all their shares when they exercised the above share
options would have been £8210099 2006 £845633
the above table excludes potential awards under the prsp 
reports accounts shareholder
information
operating 
and financial
review
overview 44 mitchells  butlers
annual report and accounts 2007
remuneration report
supplementary information 
on directors’ remuneration
executive share options
options granted under the exsop are exercisable between 27 may 2006 and 23 may 2015
rolledover legacy options
rolledover legacy options became exercisable on demerger from six continents in april 2003 and if not exercised will lapse on
various dates up to 2012 rolledover legacy options ceased to be subject to performance conditions on demerger 
sharesave options
sharesave options are exercisable between 1 october 2007 and 31 march 2009 
no directors’ options over mitchells  butlers plc shares under the exsop or sharesave plan lapsed during the year
share incentive plan
as at 29 september 2007 the executive directors had the following entitlements subject to the rules of the allemployee share
incentive plan awards made before the share consolidation on 18 october 2006 have been adjusted to reflect that consolidation
awarded awarded awarded awarded awarded
270603 normal 280604 normal 300605 normal 050706 normal 290607 normal
 vesting  vesting  vesting  vesting  vesting
2385p date 27175p date 3300p date 51975p date 8760p date
tim clarke 754 270606 915 280607 754 300608 478 050709 342 290610
mike bramley 574 270606 866 280607 723 300608 462 050709 278 290610
t ony hughes 627 270606 866 280607 723 300608 462 050709 278 290610
karim naffah 691 270606 915 280607 754 300608 478 050709 292 290610
the share price on 27 june 2006 the date of vesting was 5050p
the share price on 28 june 2007 the date of vesting was 8760p
the share price on 29 june 2007 the date of award was 8795p
directors’ shareholdings
ordinary shares of 8
13
⁄24p
290907 300906
executive directors
tim clarke 806409 487022
mike bramley 422666 104222
t ony hughes 468381 110932
karim naffah 333131 224827
nonexecutive directors
roger carr 27470 17470
george fairweather 1658 1658
drummond hall 7974 2902
sir tim lankester 1017 1017
sara weller 4383 4354
adjusted for the share consolidation implemented on 18 october 2006
the above shareholdings including the shares held on behalf of the executive directors by the trustee of the company’s share
incentive plan are all beneficial interests 
in the period from 29 september 2007 to 28 november 2007 there were no changes in the directors’ interests
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 2007 was 6110p and the range during the year to 28 september 2007 was 5820p 
to 8980p per share 45 mitchells  butlers
annual report and accounts 2007
directors’ pension benefits
increase
transfer value in transfer
of accrued pension value over increase in increase in accrued
year less accrued accrued pension at
years of directors’ directors’ pension pension 290907
pensionable age at contribution 300906 290907 contributions
  
director service 290907 £ £ £ £ £ pa £ pa £ pa
tim clarke 17 50 29500 3459200 3689000 200300 19600 10700 295800
mike bramley 27 56 – 3754500 4220000 465500 23800 16400 256300 
t ony hughes† 12 59 9000 2301000 2861200 551200 18400 14400 140800 
karim naffah 16 44 21200 1522000 1663400 120200 17000 12000 173700
contributions paid in the year by the directors under the terms of the plans
the absolute increase in accrued pension during the year
the increase in accrued pension during the year excluding any increase for inflation
accrued pension is that which would be paid annually on retirement at 60 based on service to 29 september 2007
†the value of accrued benefits and the increase in transfer value for the year to 29 september 2007 reflects in part the decision taken at the discretion of the committee
after careful consideration and with the consent of the plan trustees to allow tony hughes to draw his accrued pension without deduction on his early retirement aged
59 from 31 december 2007 no specific additional contribution is or has been made by the company in respect of this early retirement
tim clarke and karim naffah are members of the final salary section of the plan 
mike bramley opted out of the plan for future accrual with effect from 5 april 2006 and tony hughes opted out of the plan for
future accrual from 31 march 2007 death benefits up to the lifetime allowance will be provided by the plan all other future
benefits will be provided by mabetus
members of the plan have the option to pay additional voluntary contributions neither any such contributions nor the resulting
benefits are included in the above table
transfer values have been calculated in a manner consistent with the retirement benefits schemes – transfer values gn11
published by the institute of actuaries and the faculty of actuaries
approved by the board
sara weller
chairman of the remuneration committee
28 november 2007
reports accounts shareholder
information
operating 
and financial
review
overview 46
independent auditors’ 
report to the members 
of mitchells  butlers plc
we have audited the group financial
statements of mitchells  butlers plc 
for the year ended 29 september 2007
which comprise the group income
statement the group statement of
recognised income and expense the
group balance sheet the group cash flow
statement and the related notes 1 to 33
these group financial statements have
been prepared under the accounting
policies set out therein
we have reported separately on the 
parent company financial statements of
mitchells  butlers plc for the year ended
29 september 2007 and on the information
in the directors’ remuneration report that
is described as having been audited
this report is made solely to the
company’s members as a body in
accordance with section 235 of the
companies act 1985 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 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 company’s members as
a body for our audit work for this report
or for the opinions we have formed
respective responsibilities of directors
and auditors 
the directors’ responsibilities for
preparing the annual report and the
group financial statements in accordance
with applicable united kingdom law and
international financial reporting
standards ‘ifrs’s as adopted by the
european union are set out in the
statement of directors’ responsibilities
our responsibility is to audit the group
financial statements in accordance with
relevant legal and regulatory requirements
and international standards on auditing
uk and ireland
we report to you our opinion as to
whether the group financial statements
give a true and fair view and whether 
the group financial statements have 
been properly prepared in accordance
with the companies act 1985 and 
article 4 of the ias regulation we also
report to you whether in our opinion the
information given in the directors’ report
is consistent with the financial statements
the information given in the directors’
report includes that specific information
presented in the operating and financial
review that is cross referred from the
business review section of the directors’
report
in addition we report to you if in our
opinion we have not received all the
information and explanations we require
for our audit or if information specified
by law regarding directors’ remuneration
and other transactions is not disclosed
we review whether the corporate
governance statement reflects the
company’s compliance with the nine
provisions of the 2003 combined code
specified for our review by the listing
rules of the financial services authority
and we report if it does not we are not
required to consider whether the board’s
statements on internal control cover all
risks and controls or form an opinion on
the effectiveness of the group’s corporate
governance procedures or its risk and
control procedures
we read other information contained 
in the annual report and consider
whether it is consistent with the audited
group financial statements the other
information comprises only the operating
and financial review the directors’ report
the corporate governance statement 
the audit committee report and 
the unaudited part of the directors’
remuneration report we consider the
implications for our report if we become
aware of any apparent misstatements 
or material inconsistencies with the
financial statements our responsibilities
do not extend to any other information
basis of audit opinion
we conducted our audit in accordance
with international standards on auditing
uk and ireland issued by the auditing
practices board an audit includes
examination on a test basis of evidence
relevant to the amounts and disclosures in
the group financial statements it also
includes an assessment of the significant
estimates and judgments made by the
directors in the preparation of the group
financial statements and of whether the
accounting policies are appropriate to the
group’s circumstances consistently
applied and adequately disclosed
we planned and performed our audit 
so as to obtain all the information and
explanations which we considered necessary
in order to provide us with sufficient
evidence to give reasonable assurance 
that the group financial statements are 
free from material misstatement whether
caused by fraud or other irregularity or
error in forming our opinion we also
evaluated the overall adequacy of the
presentation of information in the group
financial statements
opinion
in our opinion
– the group financial statements give 
a true and fair view in accordance with
ifrss as adopted by the european
union of the state of the group’s 
affairs as at 29 september 2007 and 
of its loss for the year then ended
– the group financial statements have
been properly prepared in accordance
with the companies act 1985 and
article 4 of the ias regulation and
– the information given in the directors’
report is consistent with the group
financial statements
ernst  young llp
registered auditors
london
28 november 2007
mitchells  butlers
annual report and accounts 2007 47 mitchells  butlers
annual report and accounts 2007
group income statement
for the 52 weeks ended 
29 september 2007
2007 2006
52 weeks 52 weeks
before before 
exceptionalexceptional exceptionalexceptional 
items items total items items total
notes £m £m £m £m £m £m
revenue 1 3 1894 – 1894 1720 – 1720
operating costs before depreciation
and amortisation 4 9 1422 11 1433 1290 7 1297
lossprofit arising on propertyrelated items 9 – 23 23 – 23 23 
ebitda 472 34 438 430 16 446
depreciation and amortisation 14 15 129 – 129 121 – 121
operating profit 3 343 34 309 309 16 325
finance costs 9 10 153 221 374 118 4 122
finance revenue 10 6 – 6 9 – 9
net finance income from pensions 10 11 – 11 8 – 8 
profitloss before tax 207 255 48 208 12 220
t ax expensecredit 9 11 62 100 38 64 39 25
profitloss for the financial period
attributable to equity holders of 
the parent 145 155 10 144 51 195 
earningsloss per ordinary share
basic 13 355p 25p 293p 397p
diluted 13 344p 25p 286p 388p
dividends
ordinary dividends
proposed or paid pence 12 1425 1225
proposed or paid £m 12 57 53
special dividends
paid pence 12 10000 –
paid £m 12 486 –
exceptional items are explained in note 1 and analysed in note 9
earnings before interest tax depreciation and amortisation
all activities relate to continuing operations
the notes on pages 51 to 86 form an integral part of these financial statements
reports accounts shareholder
information
operating 
and financial
review
overview 48
group statement of recognised
income and expense
for the 52 weeks ended 
29 september 2007
2007 2006
52 weeks 52 weeks
restated
notes £m £m
unrealised gain on revaluation of the property portfolio 2 1124 –
t ax charge relating to movement in unrealised gain due to revaluation 2 11 317 –
t ax credit relating to indexation of gains in respect of previous revaluations 11 25 19
gainslosses on cash flow hedges taken to equity 21 55 22
actuarial gains on defined benefit pension schemes 8 33 27
t ax on items recognised directly in equity 11 23 11 
t ax credit in respect of change in tax rate 11 30 –
income recognised directly in equity 927 35
transfers to the income statement
on cash flow hedges 21 15 16
t ax on items transferred from equity 11 5 5
net income recognised directly in equity 937 46
lossprofit for the financial period 10 195 
t otal recognised income and expense for the financial period 
attributable to equity holders of the parent 927 241
effect of prior year adjustment 2 76
restated in respect of a prior year adjustment see note 2 to the financial statements
the notes on pages 51 to 86 form an integral part of these financial statements
mitchells  butlers
annual report and accounts 2007 49
2007 2006
restated
notes £m £m
assets
goodwill and other intangible assets 14 17 22
property plant and equipment 15 5030 3867 
lease premiums 11 13
deferred tax asset 22 75 68 
derivative financial instruments 21 30 –
t otal noncurrent assets 5163 3970 
inventories 16 38 42
trade and other receivables 17 69 81
derivative financial instruments 21 79 –
cash and cash equivalents 28 117 375 
t otal current assets 303 498 
noncurrent assets held for sale 18 6 88 
t otal assets 5472 4556 
liabilities
borrowings 20 234 41
derivative financial instruments 21 295 7
trade and other payables 19 243 251
current tax liabilities 18 22
t otal current liabilities 790 321
borrowings 20 2317 2375
derivative financial instruments 21 47 55
pension liabilities 8 18 99
deferred tax liabilities 22 723 494
provisions 23 1 3
t otal noncurrent liabilities 3106 3026
t otal liabilities 3896 3347
net assets attributable to equity holders of the parent 1576 1209 
equity
called up share capital 24 26 34 34
share premium account 26 14 14
capital redemption reserve 26 33
revaluation reserve 26 828 –
own shares held 26 13 12
hedging reserve 26 20 30
translation reserve 26 76
retained earnings 26 683 1194 
t otal equity 1576 1209 
restated in respect of a prior year adjustment see note 2 to the financial statements
the notes on pages 51 to 86 form an integral part of these financial statements
signed on behalf of the board
tim clarke
karim naffah
28 november 2007
mitchells  butlers
annual report and accounts 2007
group balance sheet
29 september 2007
reports accounts shareholder
information
operating 
and financial
review
overview 50
group cash flow statement
for the 52 weeks ended 
29 september 2007
2007 2006
52 weeks 52 weeks
notes £m £m
cash flow from operations 27 447 430 
interest paid 151 115
interest received 68
t ax paid 33 48
net cash from operating activities 269 275 
investing activities
purchases of property plant and equipment 252 179
acquisition of whitbread pub restaurant sites 8 489
purchases of intangibles computer software 1 3
proceeds from sale of property plant and equipment 162 88
proceeds from cash deposits with a maturity of greater than three months – 1 
defence costs 9 – 4
corporate restructuring costs 4 –
net cash used in investing activities 103 586
financing activities
purchase of own shares 46 76
proceeds on release of own shares held 11 12 
repayment of principal in respect of securitised debt 20 39 460
proceeds from issue of securitised debt – 1078 
proceeds from issue of other debt 192 – 
expenditure associated with refinancing 4 10
repayment of principal in respect of other loans – 1
dividends paid 12 538 56
net cash used in financing activities 424 487 
net decreaseincrease in cash and cash equivalents 29 258 176
cash and cash equivalents at the beginning of the financial period 375 199 
cash and cash equivalents at the end of the financial period 117 375 
cash and cash equivalents are defined in note 1
the notes on pages 51 to 86 form an integral part of these financial statements
mitchells  butlers
annual report and accounts 2007 51
1 general information 
mitchells  butlers plc the ‘group’ is
required to prepare its consolidated
financial statements in accordance with
international financial reporting standards
as adopted by the european union ‘ifrs’
and in accordance with the companies
act 1985
the group has adopted a policy of
revaluing its freehold and long leasehold
land and buildings as at 29 september
2007 and these are now stated at fair
value short leasehold properties fixtures
and fittings are held at deemed cost and
noncurrent assets held for sale as at 
29 september 2007 are held at the lower
of deemed cost or expected net realisable
value upon their disposal
the change in accounting policy reflects
the adoption by the group of emerging
best practice among uk listed companies
in addition the group has been pursuing
a property based refinancing during the
year seeking to realise for shareholders the
potential value of the group’s property
portfolio the revaluation of freehold and
long leasehold land and buildings within
the group’s balance sheet provides
shareholders with a more representative
value than the historic cost basis
certain items of property plant and
equipment as at 30 september 2006 are
held at deemed cost under the transitional
rules of ifrs
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
with the exception of the change in
accounting policy noted above the
group’s accounting policies have been
applied consistently although certain
exemptions to the retrospective
application of ifrs have been made by
the group in accordance with ifrs 1
‘firsttime adoption of international
financial reporting standards’
the group’s accounting reference date 
is 30 september the group draws up 
its financial statements to the saturday
directly before or following the accounting
reference date as permitted by section
223 3 of the companies act 1985
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 and liabilities income and expense
the areas involving a higher degree of
judgement or complexity or areas where
assumptions and estimates are significant
to the financial statements include
depreciation and amortisation asset
impairments and pensions actual results
may differ from estimates
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 the financial statements
of the subsidiaries are prepared for the
same financial reporting period as the
company where necessary adjustments
are made to the financial statements 
of subsidiaries to bring their accounting
policies into line with those used by the
group intercompany transactions balances
and unrealised gains and losses on
transactions between group companies 
are eliminated on consolidation
intangible assets
i goodwill
goodwill arising in respect of acquisitions
being the excess of the purchase
consideration over the fair value attributed
to the separately identifiable assets
liabilities and contingent liabilities acquired
is stated at cost less any impairment 
in value 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 any impairment 
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
goodwill arising on acquisitions prior 
to 30 september 1998 was eliminated
against reserves in accordance with ifrs3
‘business combinations’ such goodwill
remains eliminated against reserves 
and is not included in determining any
subsequent profit or loss on disposal
goodwill denominated in foreign currencies
is translated into sterling at each balance
sheet date and any movements are accounted
for as set out under ‘foreign currencies’
ii 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 ten years with
the majority being five years
property plant and equipment
within property plant and equipment
freehold and long leasehold land and
buildings have been revalued as at 
29 september 2007 to fair value short
leasehold properties fixtures and fittings
are held at historic cost and noncurrent
assets held for sale as at 29 september
2007 have not been revalued surpluses
which arise from the revaluation 
exercise are recorded directly within 
the revaluation reserve unless they are
reversing a revaluation decrease 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 income where the revaluation exercise
gives rise to a deficit this is reflected
directly in the revaluation reserve to the
extent that a surplus exists against the
same asset any residual amount is then
recognised against income
property plant and equipment as at 
30 september 2006 is stated at historic
cost or deemed cost less accumulated
depreciation and any impairment in 
value properties and land that had been
revalued prior to 26 september 2004 
the date of transition to ifrs are stated
as at 30 september 2006 on the basis 
of deemed cost being the revalued
amount at the date of that revaluation
the use of the ‘deemed cost’ exemption
on transition to ifrs means that there
were no revaluation surpluses in respect 
of property plant and equipment at 
that date consequently the revaluation
surplus reflected in the revaluation reserve
represents the increase in valuation above
the previous carrying amount and any
downward valuations are recognised in the
income statement
mitchells  butlers
annual report and accounts 2007
notes to the financial statements
for the 52 weeks ended 
29 september 2007
reports accounts shareholder
information
operating 
and financial
review
overview 52
notes to the financial statements
continued
1 general information continued
depreciation is charged to the income
statement on a straight line basis over the
estimated useful lives of items of property
plant and equipment freehold land is not
depreciated freehold and long leasehold
properties are depreciated over 50 years
from the date of acquisition to their
estimated residual value leasehold
properties are depreciated over the
unexpired term of the lease where this is
less than 50 years the cost less residual
value based on prices prevailing at the
balance sheet date of plant machinery
fixtures fittings and equipment is spread
by equal instalments over the estimated
life of the relevant assets namely
equipment in retail outlets 3–20 years
information technology 
equipment 3–7 years
vehicles 4–5 years
plant and machinery 4–20 years
assets held under finance leases are
depreciated over their expected lives on
the same basis as owned assets or where
shorter over the term of the relevant lease
expected useful lives and residual values
are reviewed each year and adjusted 
if appropriate
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 
the carrying values of property plant and
equipment are reviewed on an outlet basis
for impairment if events or changes in
circumstances indicate that the carrying
amount may not be recoverable an
impairment loss is recognised whenever
the carrying amount of an outlet exceeds
its recoverable amount the recoverable
amount is the higher of an outlet’s fair
value less costs to sell and value in use
where an impairment loss subsequently
reverses the carrying amount of the asset
is increased to the revised estimate of 
its recoverable amount but 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 years a reversal of an impairment
loss is recognised as income immediately
noncurrent assets held for sale and
disposal groups
when the value of an asset or group of
assets will be recovered through a sale
transaction rather than continuing use the
assets are reclassified as noncurrent assets
held for sale or as a disposal group where
the assets are to be sold as a group in a
single transaction this condition is met
when the sale is highly probable and the
asset is available for immediate sale in 
its present condition management must 
be committed to the sale and completion
should be expected within one year from
the date of classification noncurrent assets
held for sale and disposal groups are valued
at the lower of book value and fair value less
costs to sell and are no longer depreciated
leases
i operating leases
leases in which substantially all the risks
and rewards of ownership are retained 
by the lessor are classified as operating
leases payments made under operating
leases and subleases are charged to 
the income statement on a straight line
basis over the period of the lease lease
incentives are recognised as a reduction 
in the rental expense over the lease term
premiums paid on acquiring a new lease
are spread on a straight line basis over the
lease term such premiums are classified
in the balance sheet as current or non
current prepayments with the current
portion being the element which relates 
to the following financial period
ii finance leases
leases in which the group assumes
substantially all the risks and rewards of
ownership are classified as finance leases
property plant and equipment acquired
by way of finance lease are capitalised 
at the inception of the lease at an amount
equal to the lower of their fair value and
the present value of the minimum lease
payments the corresponding liability 
to the lessor is included in the balance
sheet as a finance lease obligation lease
payments are apportioned between 
the finance lease obligation and finance
charges in the income statement so as 
to achieve a constant rate of interest on
the remaining balance of the obligation
inventories
inventories are stated at the lower of cost
and net realisable value work in progress
is in respect of property development
activities and includes the direct costs 
of the developments and associated
professional fees
financial instruments
i trade and other receivables
trade and other receivables are recognised
and carried at original cost less an
allowance for any uncollectable amounts
ii cash and cash equivalents
cash and cash equivalents comprise cash
at bank and in hand and other shortterm
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 current asset
investments for the purposes of the cash
flow statement cash and cash equivalents
consists of cash and cash equivalents as
defined above net of bank overdrafts that
are repayable on demand and that are
integral to the group’s cash management
iii trade and other payables
trade and other payables are recognised
at original cost
iv borrowings
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
v derivative financial instruments and 
hedge accounting
the group uses interest rate inflation 
and currency swap contracts to hedge its
exposure to changes in interest rates the
retail price index and exchange rates it
also uses gilt hedges to hedge its exposure
to movements in the fair value of its fixed
rate debt these contracts are designated
as cash flow hedges and hedge accounting
is applied where appropriate derivative
financial instruments are not used for
trading or speculative purposes
mitchells  butlers
annual report and accounts 2007 53
1 general information continued
interest rate inflation currency swap 
and gilt hedges are initially measured at
fair value on the contract date and are
remeasured to fair value at subsequent
reporting dates fair value is calculated as
the present value of the estimated future
cash flows
changes in the fair value of derivative
instruments that are designated and
effective as hedges of highly probable
future cash flows are recognised directly 
in equity the cumulative gain or loss is
transferred from equity and recognised 
in the income statement at the same time
as the hedged transaction affects profit 
or loss the ineffective part of any gain 
or loss is recognised in the income
statement immediately
movements in the fair value of derivative
instruments which do not qualify for hedge
accounting are recognised in the income
statement immediately
hedge accounting is discontinued when 
the hedging instrument expires or is sold
terminated or no longer qualifies for hedge
accounting at that point the cumulative
gain or loss in equity remains in equity and
is recognised in accordance with the above
policy when the transaction affects profit or
loss if the hedged transaction is no longer
expected to occur the cumulative gain 
or loss recognised in equity is recognised
in the income statement immediately
vi equity instruments
equity instruments issued by the company
are translated at the fair value of the
proceeds received net of direct issue costs
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 income statement
nonmonetary assets and liabilities are
measured at cost using the exchange rate 
on the date of the initial transaction
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 weighted
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 income statement 
as part of the gain or loss on sale
revenue
revenue is the value of goods and services
sold to third parties as part of the group’s
trading activities after deducting sales
based taxes coupons and staff discounts
the majority of revenue comprises food
and beverages sold in the group’s outlets
this revenue is recognised at the point 
of sale to the customer revenue arising
from the sale of development property 
is recognised on legal completion of 
the sale 
tax
the income tax expense represents 
both the income tax payable based on
profits for the year and deferred tax and
is calculated using tax rates enacted or
substantively enacted at the balance 
sheet date income tax is recognised in 
the income statement except when it
relates to items charged or credited directly
to equity in which case the income tax is
also charged or credited to equity
deferred tax is recognised on all temporary
differences between the carrying amounts
of assets and liabilities for financial
reporting purposes and the amount of their
tax bases no deferred tax is recognised 
if the temporary difference arises from
goodwill or the initial recognition of an
asset or liability in a transaction that is 
not a business combination and at the 
time of the transaction affects neither the
accounting profit nor taxable profit or 
loss deferred tax is not recognised in
respect of temporary differences associated
with investments in subsidiaries where the
timing of the reversal of the temporary
difference can be controlled and it is
probable that the temporary difference 
will not reverse in the foreseeable future
the amount of deferred tax provided 
is based on the expected manner of
realisation or settlement of the carrying
amount of assets and liabilities deferred
tax assets are recognised only to the extent
that it is probable that future taxable profits
will be available against which the asset can
be utilised
employee benefits
i pension obligations
the group has both defined benefit and
defined contribution pension arrangements
the liability recognised in the balance
sheet in respect of the group’s defined
benefit arrangements is the present value
of the defined benefit obligation less the
fair value of the scheme assets the cost 
of providing benefits is determined 
using the projected unit credit method 
as determined annually by qualified
actuaries the current service cost together
with the cost of any benefits relating to
past service is charged to operating profit
the interest cost and the expected return
on assets are shown as a net amount
within finance income or finance expense
actuarial gains and losses are recognised
in full in the period in which they occur
in the statement of recognised income and
expense rather than the income statement
for the defined contribution arrangements
the charge against profit is equal to 
the amount of contributions payable
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 54
notes to the financial statements
continued
1 general information continued
ii sharebased compensation
the group operates a number of equity
settled sharebased 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 marketbased vesting
conditions on the date of grant the
expense is generally recognised over the
vesting period and is adjusted for the
estimated effect of non marketbased
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 a combination of blackscholes
binomial and monte carlo simulation
models depending on the conditions
attached to the particular share scheme
the group has taken advantage of 
the transitional provisions of ifrs 2
‘sharebased payment’ and applied its
requirements to only those awards 
granted after 7 november 2002 that had
not vested before 1 january 2005
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
provisions
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
dividends
dividends proposed by the board but
unpaid at the year 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
exceptional items
exceptional items are those which are
separately identified by virtue of their 
size or incidence so as to allow a better
understanding of the underlying trading
performance of the group exceptional
items and the related tax on these are
excluded from the calculation of earnings
per share before exceptional items
recent accounting developments
during the year the international
accounting standards board iasb 
and international financial reporting
interpretations committee ifric 
issued the following standards and
interpretations with an effective date after
the date of these financial statements
they have not been adopted early by the
group the directors do not anticipate
that the adoption of the new standards 
or revisions to existing standards will 
have a material impact on the group’s
financial statements in the period of initial
adoption and expect that there will be no
material impact on reported income or
net assets the impact of ifric 14 will
depend on the balance sheet position of
the pension plans in the year of adoption
and in particular whether a pension plan
surplus or deficit is recorded under
ias 19
ifrs7 ‘financial instruments disclosures’
and ‘amendment to ias 1 – capital
disclosures’ will require disclosure of
additional information relating to the
group’s financial instruments ifrs 7 
is first effective for periods beginning 
on or after 1 january 2007
ifrs 8 ‘operating segments’ replaces
ias 14 and requires segment information
to be presented on the same basis as used
for internal reporting purposes ifrs 8 
is first effective for periods beginning on
or after 1 january 2009 
revised ias 23 ‘borrowing costs’ which is
first effective for periods beginning on or
after 1 january 2009 requires costs which
are directly attributable to assets that take 
a substantial period of time before they
are ready for use or sale to be capitalised
ifric14 ‘ias19 – the limit on a 
defined benefit asset minimum funding
requirements and their interaction’ is first
effective for periods beginning on or after
1 january 2008 and provides guidance on
the amount of pension surplus to be
recognised as an asset
exchange rates
the results of overseas operations 
have been translated into sterling at the
weighted average euro rate of exchange
for the financial period of £1  s148
2006 £1  s146 where this is a
reasonable approximation to the rate at
the dates of the transactions euro and 
us denominated assets and liabilities 
have been translated at the relevant rate
of exchange at the balance sheet date 
of £1  s143 2006 £1  s147 and 
£1  204 2006 £1  187 respectively
mitchells  butlers
annual report and accounts 2007 55 mitchells  butlers
annual report and accounts 2007
2 change of accounting policy and
prior year adjustment
as at 29 september 2007 the group has
adopted a policy of revaluing its freehold
and long leasehold property portfolio to
market value in accordance with the fair
value provisions of ias 16 ‘property plant
and equipment’ this is a change from the
previous policy under which property
plant and equipment was stated at historic
cost except for certain items of property
plant and equipment held at deemed 
cost under the transitional rules of ifrs
as stated in note 1 above the change in
accounting policy reflects the adoption 
by the group of emerging best practice
among uk listed companies in addition
the group has been pursuing a property
based refinancing during the year seeking
to realise for shareholders the potential
value of the group’s property portfolio
the revaluation of property plant and
equipment within the group’s balance
sheet provides shareholders with a more
representative value than the historic 
cost basis
the impact on the financial statements 
of this change in accounting policy has
been to
• increase the net book value of land and
buildings as at 29 september 2007 by
£1124m
• recognise an exceptional charge against
operating profit in respect of
‘impairment arising from revaluation 
of the property portfolio’ of £45m 
this impairment reflects the difference
for all assets where the fair value of the
asset as determined by the revaluation 
as at 29 september 2007 is below the 
net book value prior to the revaluation
• the impact of the above is a net increase
in the value of property plant and
equipment of £1079m see note 15
this has been booked as an increase 
on cost or valuation of £1042m and a
write back of accumulated depreciation
of £37m
• increase the amount of the deferred
taxation provision by £296m after taking
account of the change in the rate of
corporation tax in 2008
• recognise an exceptional deferred tax
credit of £13m in respect of ‘impairment
arising from revaluation of the property
portfolio’ and
• recognise a credit of £828m against the
revaluation reserve representing the
revaluation adjustment of £1124m plus
the related deferred taxation liability 
of £296m
as a result of the work performed to
enable a policy of revaluation to be
adopted the group has obtained more
detailed information in respect of the
valuation and tax base cost for individual
assets this information has enabled 
the group to adjust its brought forward
deferred taxation provision as at 
1 october 2005 to a more appropriate
amount the group has increased 
its deferred taxation provision as at 
1 october 2005 by £99m with a
corresponding entry recognised in
retained earnings at the same date it has
increased the tax credit relating to the
indexation of gains in respect of previous
revaluations in its statement of recognised
income and expense in 2006 by £23m 
as a result of this prior year adjustment
the deferred taxation provision reported
in 2006 has increased by £76m and the
amount of retained earnings reported 
in 2006 has reduced by £76m
reports accounts shareholder
information
operating 
and financial
review
overview 56
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
3 segmental analysis
the group’s primary reporting format is by business segment and its secondary format is by geographic segment the group 
has two main retail operating segments pubs  bars focusing primarily on drink and entertainmentled sites and restaurants 
focusing on food and accommodationled sites the other group activity is property development which is undertaken by standard
commercial property developments limited ‘scpd’ there are no intersegment sales
2007 52 weeks
pubs retail
 bars restaurants total scpd unallocated total
£m £m £m £m £m £m
revenue
sales to third parties 968 908 1876 18 – 1894 
operating profit
operating profit before exceptional items 191 145 336 7 – 343 
exceptional items 17 10 27 – 7 34 
operating profit after exceptional items 174 135 309 7 7 309 
net finance costs 357
t ax credit 38
loss for the financial period 10
2006 52 weeks
pubs retail
 bars restaurants total scpd unallocated total
£m £m £m £m £m £m
revenue
sales to third parties 958 762 1720 – – 1720 
operating profit
operating profit before exceptional items 179 130 309 – – 309 
exceptional items 23 – 23 – 7 16 
operating profit after exceptional items 202 130 332 – 7 325
net finance costs 105
t ax expense 25
profit for the financial period 195  57
3 segmental analysis continued
2007 52 weeks
pubs retail
 bars restaurants total scpd unallocated total
£m £m £m £m £m £m
net assets
assets 2445 2709 5154 16 – 5170
liabilities 123 112 235 6 – 241
segmental net assets 2322 2597 4919 10 – 4929
net debt 2479 2479
other unallocated liabilities 874 874
3353 1576
other
capital expenditure 110 150 260 – – 260
depreciation and amortisation 66 63 129 – – 129 
includes balances relating to derivatives pensions deferred and current tax and nonoperating payables
2006 52 weeks
pubs retail
 bars restaurants total scpd unallocated total
restated restated
£m £m £m £m £m £m
net assets
assets 2179 1914 4093 19 – 4112 
liabilities 139 106 245 1 – 246
segmental net assets 2040 1808 3848 18 – 3866 
net debt 2067 2067
other unallocated liabilities 590 590
2657 1209 
other
capital expenditure 92 595 687 – – 687
depreciation and amortisation 69 52 121 – – 121 
restated in respect of a prior year adjustment see note 2
includes balances relating to derivatives pensions deferred and current tax and nonoperating payables
geographic segments
substantially all of the group’s business is conducted in the united kingdom in presenting information by geographical segment
segment revenue and assets are based on the geographical location of customers and assets
uk germany total
2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m
revenue – sales to third parties 1859 1685 35 35 1894 1720
segment assets 5131 4069 39 43 5170 4112
capital expenditure 257 686 3 1 260 687 
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 58
notes to the financial statements
continued
4 operating costs
2007 2006
52 weeks 52 weeks
£m £m
raw materials and consumables 511 461
changes in inventory of finished goods and work in progress 4 3
staff costs note 6 506 455
hire of plant and machinery 34 34
operating lease rentals
– minimum lease payments 46 45
– contingent rents 22
other costs 330 303 
1433 1297
depreciation of property plant and equipment 122 114
amortisation of intangible assets 67
depreciation of lease premiums 1–
depreciation and amortisation 129 121 
1562 1418 
5 auditors’ remuneration
2007 2006
52 weeks 52 weeks
£m £m
audit of the financial statements 01 01
audit of the company’s subsidiaries 03 03
04 04 
other fees to auditors
– us sarbanes oxley services – 01
– taxation and other services 01 01
– corporate finance services 05 04 
06 06 
the auditors’ fee for the audit of the parent company was £21000 2006 £20000
substantially all of the auditors’ remuneration was paid in the uk
6 employees and directors
2007 2006
52 weeks 52 weeks
£m £m
costs
wages and salaries 447 397
sharebased payments note 7 88 
t otal wages and salaries 455 405
social security costs 37 35
pensions note 8 14 15 
506 455 
number number
average number of employees including parttime employees
retail 42740 38676
scpd 11 
42741 38677 
detailed information regarding directors’ emoluments pensions longterm incentive scheme entitlements and their interests in
share options is given in the remuneration report on pages 41 to 45
mitchells  butlers
annual report and accounts 2007 59
7 sharebased payments
the expense recognised for sharebased
payments in the year is £8m 2006 £8m
which comprises share option schemes
and share awards
the group had six share option schemes
all of which are equitysettled in operation
during the year
the vesting of all awards or options is
generally conditional upon participants
remaining in the employment of a
participating company during the 
vesting period
sharesave plan
the sharesave plan is a hm revenue
 customs approved savings scheme
whereby the proceeds from a savings
contract of either three or five years
duration may be used to purchase shares
under option options are granted at the
commencement of the savings contract 
at a discount of up to 20 of the market
value of the shares at the date of invitation
there are no performance conditions 
the scheme is open to all uk employees
provided that they have at least one year’s
service at the date of invitation the vesting
period is 39 months or 63 months and
options may be exercised up to six months
after the vesting date
share incentive plan
the share incentive plan is open to all uk
employees with at least 18 months service
at the date of award the plan awards free
shares to participating employees based
on salary up to a maximum award of
£3000 per employee per year there are
no performance conditions there is a
vesting period of two years as defined in
ifrs 2 ‘sharebased payment’ from the
award date shares are generally held in
trust for at least three years and are
capable of being released to participants
at any time thereafter
short term deferred incentive plan
under the short term deferred incentive
plan the annual bonuses of the executive
directors may be deferred into mitchells 
butlers shares with one matching share
awarded for every bonus share from the
grant in december 2006 participants are
also entitled to receive dividend accrued
shares on vesting equal to the value of the
ordinary dividends that would have been
paid on the vested shares during the
performance period
mitchells  butlers
annual report and accounts 2007
up to and including the grant in december
2004 relating to the 200304 bonus year
there was no additional performance
condition over the deferral period for 
the grant in december 2005 relating 
to the 200405 bonus year an additional
earnings per share related performance
condition applies in respect of the vesting
of matching shares matching shares 
will only be released in full if the group’s
adjusted earnings per share over the 
three year performance period ending 
27 september 2008 exceeds by at least
27 the increase in the uk retail price
index for the same period for the grant
in december 2006 relating to the 200506
bonus year the earnings per share related
performance condition still applies in
respect of matching shares however it 
is now determined with reference to the
average adjusted earnings per share over
the three year performance period exceeding
the uk retail price index growth
all grants of options up to and including
the grant in december 2004 vest in three
equal tranches one year two years and three
years after the date of award for the
awards in december 2005 and december
2006 vesting occurs three years after 
the award date shares are transferred 
to participants on vesting
all deferrals of bonuses into shares to date
have been entirely at the discretion of the
remuneration committee
performance restricted share plan
the performance restricted share plan
allows executive directors and other eligible
employees to receive nominal cost options
subject to the satisfaction of a performance
condition set by the remuneration
committee which is normally measured
over a three year period vesting is
conditional upon the achievement of total
shareholder return ‘tsr’ and cash return
on cash capital employed ‘crocce’
performance conditions the vesting period
for these options is generally three years
followed by a two year exercise period 
for the options with the tsr performance
condition monte carlo simulations were
performed to incorporate the market
condition in the measurement of the fair
value for all grants from 200506 onwards
participants will be entitled to receive
dividend accrued shares on vesting equal
to the value of the ordinary dividends that
would have been paid on the vested shares
during the performance period
executive share option plan
the grant of options under the executive
share option plan was discontinued
following shareholder approval of changes
to executive director remuneration in 2006 
the last grant of options under this plan
was made in june 2005 the option prices
were set at an amount not less than the
average market value of a share over 
the three business days immediately prior
to the date of grant vesting is conditional
upon the achievement of an adjusted
earnings per share related performance
condition adjusted earnings per share 
is basic earnings per share before
exceptional items
the vesting period for these options 
is three years from grant followed by 
a seven year exercise period
rolledover options
under the terms of the separation in
2003 holders of options under the 
six continents executive share option
schemes were given the opportunity 
to exchange their six continents plc
options for equivalent value new options
over mitchells  butlers plc shares 
the exchanged options are not subject 
to performance conditions and were
immediately exercisable the latest possible
exercise date for any of the rolledover
options outstanding at 29 september 2007
is 28 may 2012
further details of the above schemes are
included in the remuneration report on
pages 37 to 38
the following tables set out awards and
options granted during 2007 no options
were granted under the executive share
option plan or rolledover options
during the period
reports accounts shareholder
information
operating 
and financial
review
overview 60
notes to the financial statements
continued
7 sharebased payments continued
short term
deferred performance share
incentive restricted sharesave incentive
plan share plan plan plan
number of sharesoptions awarded in fy 2007 247346 1445698 938905 115121
the group has used separate option pricing models and assumptions for each plan the following tables set out weighted average
information about how the fair value of each option grant was calculated
short term
deferred performance
incentive restricted sharesave
2007 plan share plan plan
monte carlo
simulation and
valuation model
v
binomial blackscholes
weighted average share price 6850p 8695p
exercise price –
i
7110p
expected dividend yield –
ii
180
riskfree interest rate 478 519
volatility
iii
240 240
expected life years
iv
30 38
short term
deferred performance
incentive restricted sharesave
2006 plan share plan plan
monte carlo
simulation and
valuation model blackscholes binomial blackscholes
weighted average share price 3913p 4010p 5093p
exercise price nil –
i
4010p
expected dividend yield 327 –
ii
327
riskfree interest rate 423 421 480
volatility
iii
260 260 260
expected life years
iv
30 28 40 
i
the exercise price relating to the performance restricted share plan is £1 per participating employee per exercise
ii
the expected dividend yield input for the grant of performance restricted share plan options in 2006 and 2007 is zero as
participants are entitled to dividend accrued shares to the value of the ordinary dividends paid during the vesting period
iii
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 where insufficient share price data is available competitor share price volatility
data over a longer period equal to the expected life of the option or share award is considered
iv
the expected term of the options is taken to be the midpoint between vesting and lapse except for the performance restricted
share plan where the terms of the plan resulted in it being advantageous for participants to exercise directly after vesting 
in this case the expected life has been assumed to equate to the vesting period
v
the fair value of the short term deferred incentive plan awarded in fy 2007 is equal to the share price on the date of award as
there is no price to be paid and employees are entitled to dividend accrued shares
the fair value of the share incentive plan shares is equal to the share price on the date of grant as there is no option price to be 
paid and employees are entitled to dividends during the vesting period hence the assumptions set out above are not relevant to 
this scheme
mitchells  butlers
annual report and accounts 2007 61
7 sharebased payments continued
movements in the awards and options outstanding under these schemes for the years ended 29 september 2007 and 30 september
2006 are as follows
short term performance share
deferred restricted incentive
incentive plan share plan plan
number of number of number of
shares shares shares
thousands thousands thousands
outstanding at 1 october 2005 679 4372 810
granted 325 2347 197
exercised 253 600 54
lapsed – 952 74
outstanding at 30 september 2006 751 5167 879
granted 247 1446 115
exercised 253 1019 75
lapsed – 542 44
share consolidation
i
– – 149
outstanding at 29 september 2007 745 5052 726
fair value of options granted during the period pence
at 29 september 2007 7215 4776
ii
8795
at 30 september 2006 3541 2758
ii
5150 
weighted average remaining contract life years
at 29 september 2007 13 32 –
iii
at 30 september 2006 13 33 –
iii
i
the allocated shares in the sip trust were consolidated as part of the share consolidation on 18 october 2006 resulting in a
reduction of 149250
ii
for the performance restricted share plan the weighted average fair value is shown
iii
share incentive plan shares are capable of remaining with the sip trust indefinitely while participants continue to be 
employed by the group
executive share option plan sharesave plan rolledover options
weighted weighted weighted
number of average number of average number of average
shares option price shares option price shares option price
thousands pence thousands pence thousands pence
options outstanding at 1 october 2005 11322 2631 4932 1993 7222 2719
granted – – 980 4010 – –
exercised 1475 2217 35 1739 3456 2689
lapsed 107 2977 682 2157 665 2552 
options outstanding at 30 september 2006 9740 2689 5195 2354 3101 2787
granted – – 939 7110 – –
exercised 1980 2276 1316 1696 1475 2838
lapsed 1 3261 585 2924 – –
options outstanding at 29 september 2007 7759 2795 4233 3535 1626 2741
options exercisable
at 29 september 2007 4408 2440 6 1690 1626 2741
at 30 september 2006 2592 2190 – – 3101 2787 
fair value of options granted during the period pence
at 29 september 2007 – 2741
i
–
at 30 september 2006 – 1477
i
–
range of option prices pence
at 29 september 2007 2190 – 3305 1690 – 7110 2145 – 3645
at 30 september 2006 2190 – 3305 1690 – 4010 2145 – 3645
i
weighted average fair value has been shown for the sharesave plan
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 62
notes to the financial statements
continued
7 sharebased payments continued
the weighted average share price during the period was 7374p 2006 4580p
summarised information about options outstanding at 29 september 2007 under the share option schemes is as follows
options outstanding options exercisable
weighted weighted
average weighted average weighted
number remaining average number remaining average
outstanding contract life option price outstanding contract life option price
range of exercise prices pence thousands years pence thousands years pence
performance restricted share plan
negligible
i
5052 32 –
i
41 12 –
i
executive share option plan
2190 1121 57 2190 1121 57 2190
2525 3287 67 2525 3287 67 2525
3261 to 3305 3351 77 3262–––
7759 69 2795 4408 64 2440
sharesave plan
1690 874 15 1690 6 – 1690
2090 927 12 2090–––
2585 721 21 2585–––
4010 801 29 4010–––
7110 910 40 7110–––
4233 23 3535 6 – 1690
rolledover options
1814 to 2420 35 24 2145 35 24 2145
2421 to 3030 1447 35 2666 1447 35 2666
3031 to 3645 144 04 3645 144 04 3645
1626 32 2741 1626 32 2741
i 
the exercise price relating to the performance restricted share plan is £1 per participating employee per exercise
mitchells  butlers
annual report and accounts 2007 63 mitchells  butlers
annual report and accounts 2007
8 pensions
retirement and death benefits are provided for eligible employees in the united kingdom principally by the mitchellsbutlers pension
plan mabpp and the mitchells  butlers executive pension plan mabepp these plans are funded hm revenue  customs
approved occupational pension schemes with defined contribution and defined benefit sections the defined benefit sections of the
plans closed to new entrants during 2002 with new members provided with defined contribution arrangements the defined benefit
liability relates to these funded plans together with an unfunded unapproved pension arrangement the executive topup scheme
or mabetus in respect of certain mabepp members the assets of the plans are held in selfadministered trust funds separate
from the company’s assets
the valuations used for ias 19 purposes are based on the preliminary results of the latest full actuarial valuation carried out at
31 march 2007 and expected to be finalised in december 2007 updated by the schemes’ qualified actuaries to 29 september 2007
scheme assets are stated at market value at 29 september 2007 and the liabilities of the schemes have been assessed as at the same
date using the projected unit method as the defined benefit sections of the pension plans are now closed to new members the
current service cost as calculated under the projected unit method will increase as members approach retirement
in the 52 weeks ended 29 september 2007 the group paid regular contributions of £10m 2006 £11m and additional contributions
of £40m 2006 £20m in respect of the defined benefit arrangements in addition the group paid £1m 2006 £1m in respect of the
defined contribution arrangements
the preliminary results of the 2007 actuarial valuation showed a funding deficit using a more prudent basis to discount the scheme
liabilities than is required by ias 19 and a formal recovery plan to 2017 is being finalised with the trustees the result of this is that
the group will make additional contributions of £24m in the 52 weeks ending 27 september 2008 of which £20m represents the final
instalment of the previously agreed schedule of contributions this will be followed by further additional contributions of £24m in
each of the financial years 2009 and 2010 as part of the recovery plan to close the deficit by 2017 the level of additional contributions
will be subject to review during the next actuarial valuation as at 31 march 2010 employer contribution rates to the defined benefit
arrangements for the 52 weeks ending 27 september 2008 are expected to be 242 for the mabpp and 420 for the mabepp 
based on these expected contribution rates it is estimated that total contributions in the 52 weeks ending 27 september 2008 will 
be £38m comprising regular contributions of £14m including £1m payable in respect of the defined contribution arrangements 
and additional contributions of £24m
pension costs are assessed in accordance with the advice of independent qualified actuaries
the principal financial assumptions used by the actuaries at the balance sheet date were
2007 2006 2005 2004 2003
wages and salaries increases 49

44 43 43 42
pensions increases 34 29 28 28 27
discount rate 59 50 50 55 53
inflation rate 34 29 28 28 27
for mabpp members 59 for mabepp members includes allowance for promotional salary increases
reports accounts shareholder
information
operating 
and financial
review
overview 64
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
8 pensions continued
mortality assumptions
the mortality assumptions are based on the pa92 ‘year of birth’ standard tables with allowance for medium cohort projections with
ages rated up by two years for nonretired members of the mabpp  by three years for current pensioners and rated down by two years
for members of the mabepp  the mortality assumptions adopted have been updated to allow for improvements in life expectancies
taking into account an analysis of the recent experience of the plans a summary of the average life expectancies assumed is as follows
2007 2006
main plan exec plan main plan exec plan
years years years years
male member aged 65 current life expectancy 194 236 178 177
male member aged 45 life expectancy at 65 212 248 194 195
female member aged 65 current life expectancy 222 265 207 207
female member aged 45 life expectancy at 65 240 277 224 224
to develop the expected longterm rate of return on assets assumptions the group considered the current level of expected returns
on riskfree investments primarily government bonds the historical level of the risk premium associated with the other asset classes
in which the portfolio is invested and the expectations for future returns of each asset class the expected return for each asset class
was weighted based on the asset allocation to develop the expected longterm rate of return on assets assumption for the portfolio
resulting in a weighted average assumption of 61 at 29 september 2007 the actual investment return achieved on the scheme
assets over the year was 91 2006 108
the combined assets of the mabpp and mabepp  their expected rates of return and the value of the pension scheme assets and
liabilities at the balance sheet date can be summarised as follows
2007 2006
longterm longterm
rates rates
of return of return
expected value expected value
£m  £m
equities 79 345 75 596
bonds 59 854 46 488
property 79 93 75 98 
fair value of assets 1292 1182
present value of scheme liabilities 1310 1281
deficit in the schemes recognised as a
liability in the balance sheet 18 99
associated deferred tax asset 5 32 
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 recognised income and expense
2007 2006
group income statement £m £m
operating profit
current service cost defined benefit plans 13 14
current service cost defined contribution plans 1 1
charge to operating profit 14 15
finance income
expected return on pension scheme assets 74 69
interest on pension scheme liabilities 63 61
net finance income in respect of pensions 11 8 
t otal charge 3 7 65
8 pensions continued
2007 2006
group statement of recognised income and expense £m £m
actual return less expected return on pension scheme assets 24 43
changes in assumptions underlying the present value of the scheme liabilities 9 16
actuarial gain recognised 33 27 
the table below analyses the movement in the schemes’ net deficit in the period
pension assets pension obligations net deficit
2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m
at beginning of period 1182 1078 1281 1229 99 151
current service cost – – 13 14 13 14
interest cost on benefit obligations – – 63 61 63 61
expected return on plan assets 74 69 – – 74 69
employee contributions 4 3 4 3 – – 
employer contributions 50 31 – – 50 31 
benefits paid 42 42 42 42 – –
actuarial gainloss recognised 24 43 9 16 33 27 
at end of period 1292 1182 1310 1281 18 99
history of experience gains and losses 2007 2006 2005 2004 2003
difference between the
expected and actual return on
scheme assets
amount £m 24 43 100 27 39
percentage of scheme assets 2 4 9 3 5
experience gains and losses on
scheme liabilities
amount £m – – – 20 11 
percentage of the present value of
the scheme liabilities – – – 2 1
t otal amount recognised in the
group statement of recognised
income and expense
amount £m 33 27 7 39 71 
percentage of the present value of
the scheme liabilities 3 2 1 4 7
the cumulative amount of actuarial gains and losses recognised since 26 september 2004 in the group statement of recognised
income and expense is a £53m gain 2006 £20m gain the directors are unable to determine how much of the pension scheme
deficit recognised on transition to ifrs and taken directly to equity is attributable to actuarial gains and losses since inception 
of the schemes consequently the directors are unable to determine the amount of actuarial gains and losses that would have been
recognised in the group statement of recognised income and expense before 26 september 2004
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 66
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
9 exceptional items
2007 2006
52 weeks 52 weeks
notes £m £m
operating exceptional items
defence costs a – 4
refinancing costs b – 3
integration costs c 4 –
corporate restructuring costs d 7 –
11 7
profits on disposal of properties 39 41 
losses on disposal of properties 12 14
impairment arising from the revaluation of the property portfolio e 45 –
fair value adjustments on classification of noncurrent assets held for sale f 5 4
lossprofit arising on propertyrelated items 23 23
t otal operating exceptional items 34 16 
exceptional finance costs
write off of unamortised transaction costs b – 4
movement in fair value of derivative financial instruments g 221 –
221 4
t otal exceptional items before tax 255 12
t ax creditcharge relating to above items 74 1
exceptional tax released in respect of prior years h 940
t ax credit in respect of change in tax rate i 17 –
100 39 
t otal exceptional items after tax 155 51 
a costs associated with evaluation of the r20 approach to acquire the share capital of mitchells  butlers plc and its subsidiaries
b refinancing costs consist of operating expenses incurred in relation to the refinancing of the group’s securitised debt further
details of which are given in note 20 the refinancing also gave rise to accelerated amortisation of capitalised transaction costs
this related to secured loan notes which were repaid on refinancing the amortisation was charged to finance costs
c costs associated with the group’s acquisition of 239 pub restaurant sites acquired from whitbread on 21 july 2006
d expenditure incurred in connection with the evaluation of alternative corporate structures for the separation and refinancing 
of the group’s property portfolio and operating business
e impairment arising from the group’s adoption of a policy of revaluing its freehold and long leasehold land and buildings with
effect from 29 september 2007
f fair value adjustments on classification of noncurrent assets held for sale represent adjustments to the carrying value of property
plant and equipment prior to transferring these to assets held for sale this adjustment is made where the expected net sale
proceeds are less than the book value
g the movement in the fair value of the group’s derivative financial instruments which does not qualify for hedge accounting
h represents the release of provisions relating to tax matters which have been settled principally relating to disposals and qualifying
capital expenditure
i a deferred tax credit has been recognised in the year following the enactment of legislation in july 2007 which lowers the uk
standard rate of corporation tax from 30 to 28 with effect from 1 april 2008
none of the above exceptional items relate to discontinued operations as defined by ifrs 5 ‘noncurrent assets held for sale and
discontinued operations’ 67
10 finance costs and revenue
2007 2006
52 weeks 52 weeks
notes £m £m
finance costs
securitised and other debt
– before exceptional charge 153 118
exceptional finance costs 9
– write off of unamortised transaction costs
1
– 4
– movement in fair value of derivative financial instruments
2
221 –
374 122
finance revenue
interest receivable 69
net finance income from pensions 8 11 8
1
accelerated amortisation of capitalised transaction costs relating to secured loan notes repaid as part of the 2006 refinancing
2
represents the movement in the fair value of the group’s derivative financial instruments which does not qualify for hedge accounting this arises from the requirement
to revalue the swaps at the balance sheet date
11 tax expense
2007 2006
52 weeks 52 weeks
£m £m
t ax charged in the income statement
current tax expense
uk corporation tax 40 49
amounts overprovided in previous years 5 33
t otal current tax 35 16 
deferred tax
origination and reversal of temporary differences 51 18
adjustments in respect of prior years 5 9
change in tax rate 17 –
t otal deferred tax note 22 73 9 
t otal tax creditedcharged in the income statement 38 25 
2007 2006
52 weeks 52 weeks
restated
£m £m
t ax on items recognised directly in equity
unrealised gains due to revaluations 317 –
indexation of gains in respect of previous revaluations 25 19
actuarial gains on pension schemes 10 7
sharebased payments 314
derivative financial instruments 21 1
change in tax rate 30 –
t otal tax chargecredit on items recognised directly in equity 290 25 
restated in respect of a prior year adjustment see note 2
reconciliation of the total tax charge
the tax creditcharge in the income statement for the year is higher 2006 lower than the standard rate of corporation tax in the
uk of 30 2006 30 the differences are reconciled below
2007 2006
52 weeks 52 weeks
£m £m
lossprofit on ordinary activities before tax 48 220
accounting lossprofit multiplied by the uk standard rate of corporation tax of 30 2006 30 14 66 
expenses not deductible for tax purposes 33 
non taxable income – 2
adjustments in respect of prior years 10 42
exceptional tax credit in respect of change in tax rate 17 –
t otal tax creditcharge reported in the income statement 38 25 
mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview 68
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
12 dividends
2007 2006
52 weeks 52 weeks
£m £m
amounts paid and recognised in equity
in respect of the 53 weeks ended 1 october 2005
– final dividend of 755p per share –38
in respect of the 52 weeks ended 30 september 2006
– interim dividend of 365p per share –18
– final dividend of 860p per share 35 –
in respect of the 52 weeks ended 29 september 2007
– special interim dividend of 1000p per share 486 –
– interim dividend of 425p per share 17 –
538 56 
proposed final dividend of 100p 2006 860p per share 40 35 
the payment of the special interim dividend amounting to £486m was made on 25 october 2006 the shareholders approved at an
extraordinary general meeting on 17 october 2006 the consolidation of the share capital of the company by the issue of 34 new
ordinary shares of 8
13
⁄ 24p each for every 41 existing shares of 7
1
⁄ 12p each
the board recommended on 28 november 2007 the proposed final dividend for the 52 weeks ended 29 september 2007 this did
not qualify for recognition in the financial statements at 29 september 2007 as it had not been approved by the shareholders at
that date 69 mitchells  butlers
annual report and accounts 2007
13 earnings per ordinary share
basic earnings per share eps has been calculated by dividing the profit or loss for the financial period by the weighted average
number of ordinary shares in issue during the period excluding own shares held in treasury and 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
earnings per ordinary share amounts are presented before exceptional items see note 9 in order to allow a better understanding 
of the underlying trading performance of the group
basic diluted
eps eps
pence per pence per
profitloss ordinary ordinary
£m share share
52 weeks ended 29 september 2007
loss for the period 10 25p 25p
exceptional items net of tax 155 380p 369p
profit before exceptional items 145 355p 344p
52 weeks ended 30 september 2006
profit for the period 195 397p 388p
exceptional items net of tax 51 104p 102p
profit before exceptional items 144 293p 286p
the 2007 diluted eps per ordinary share is unchanged from the basic eps as the inclusion of the dilutive potential ordinary shares would reduce the loss per share and 
is therefore not dilutive
the weighted average number of ordinary shares used in the calculations above are as follows
2007 2006
52 weeks 52 weeks
millions millions
for basic eps calculations 408 491
effect of dilutive potential ordinary shares
contingently issuable shares 87
other share options 55 
for diluted eps calculations 421 503 
on 17 october 2006 shareholders approved a share capital consolidation together with a special dividend of 1000p per ordinary 
share the overall effect of the transaction was that of a share repurchase at fair value therefore no adjustment has been made to
comparative data
at 29 september 2007 nil 2006 nil contingently issuable shares and 1034538 2006 965822 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 antidilutive for
the periods presented
reports accounts shareholder
information
operating 
and financial
review
overview 70
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
14 goodwill and other intangible assets
computer
software goodwill total
£m £m £m
cost
at 1 october 2005 28 10 38
additions 3 – 3
disposals 4 – 4
at 30 september 2006 27 10 37 
additions 1– 1
disposals 6 – 6
at 29 september 2007 22 10 32
accumulated amortisation
at 1 october 2005 12 – 12
provided during the year 7 – 7
disposals 4 – 4
at 30 september 2006 15 – 15
provided during the year 6– 6
disposals 6 – 6
at 29 september 2007 15 – 15
net book value
at 29 september 2007 71017
at 30 september 2006 12 10 22 
there are no intangible assets other than goodwill with indefinite useful lives all amortisation charges have been expensed 
through operating costs
impairment tests for goodwill
goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis or more frequently 
if there are indications that goodwill may be impaired
goodwill relates entirely to the german business which is also the nonuk reportable segment this represents the lowest level
within the group at which goodwill is monitored for internal management purposes
as part of the impairment review the recoverable amount for this business is based on value in use that calculation uses cash flow
projections based on current year data cash flows beyond the current year have been extrapolated using a steady 15 growth 
rate – which does not exceed the longterm estimated inflation rate for the german market
the key assumptions for the value in use calculation are those regarding revenue and discount rates
the posttax discount rate used to calculate value in use is 7 2006 6 this discount rate is derived from the group’s posttax
weighted average cost of capital adjusted for the effects of taxation and for specific risks relating to the german business
revenue growth is assumed to be in line with inflation of 15 and profit margins are based on current levels
the calculation of value in use is most sensitive to changes in assumptions in respect of revenues however management believes
that the current assumptions used are reasonable
impairment reviews were performed on 1 october 2005 30 september 2006 and 29 september 2007 by comparing the carrying value
of the business to which goodwill relates with the recoverable amount management determined that there has been no impairment 71 mitchells  butlers
annual report and accounts 2007
15 property plant and equipment
fixtures
land and fittings and
buildings equipment total
£m £m £m
cost or valuation
at 1 october 2005 2860 918 3778
additions 540 144 684
disposals

57 135 192
classified as held for sale 76 21 97
at 30 september 2006 3267 906 4173 
exchange differences 1 – 1 
additions 105 154 259 
revaluation 1087 – 1087
impairment arising from the revaluation of the property portfolio 45 – 45
disposals

37 79 116
classified as held for sale 5 4 9
at 29 september 2007 4373 977 5350 
depreciation
at 1 october 2005 83 248 331
provided during the year 21 93 114 
disposals

4 122 126
fair value adjustment on classification of noncurrent assets held for sale 2 1 3
classified as held for sale 5 11 16
at 30 september 2006 97 209 306
exchange differences – 1 1
provided during the year 21 101 122 
disposals

– 70 70
fair value adjustment on classification of noncurrent assets held for sale 2 3 5
classified as held for sale 4 3 7
revaluation 37 – 37
at 29 september 2007 79 241 320
net book value
at 29 september 2007 4294 736 5030
at 30 september 2006 3170 697 3867 
at 1 october 2005 2777 670 3447 
includes assets which are fully depreciated and have been removed from the fixed asset ledger
properties
the majority of the group’s freehold and long leasehold land and buildings with the exception of land and buildings identified 
for disposal and leasehold properties with an unexpired term of 50 years or less were valued as at 29 september 2007 by 
colliers cre independent chartered surveyors and by andrew cox mrics director of property chartered surveyor
the land and buildings were valued at market value in accordance with the provisions of royal institution of chartered surveyors
rics appraisal and valuation standards ‘the red book’ assuming each asset is sold as part of the continuing enterprise in
occupation individually as a fully operational trading entity the market value has been determined having regard to factors such 
as current and future projected income levels taking account of the location the quality of the pub or restaurant and recent market
transactions in the sector
land and buildings identified for disposal leasehold outlets with an unexpired term of 50 years or less and fixtures fittings and
equipment are included at cost less depreciation
the 2006 deemed cost carrying value of the group’s property plant and equipment reflects a valuation undertaken in 1999 which
covered all properties then owned by the group other than leasehold properties having an unexpired term of 50 years or less and
which amounted to £328m at 30 september 2006 this valuation was undertaken by external chartered surveyors chesterton plc 
in accordance with the appraisal and valuation manual of the royal institution of chartered surveyors the basis of valuation was
predominantly existing use value and had regard to trading potential in 1996 a group restructuring by six continents resulted in
the transfer at book value of certain property plant and equipment to a subsidiary that subsequently became part of the mitchells 
 butlers group the book value included the effect of revaluations undertaken prior to 1996 accordingly the 2006 carrying value
of the group’s property plant and equipment reflects those revaluations in its deemed cost under ifrs which at 30 september 2006
amounted to £374m
included within property plant and equipment are assets with a net book value of £4321m 2006 £3273m which are pledged as
security for the securitisation debt and over which there are certain restrictions on title
reports accounts shareholder
information
operating 
and financial
review
overview 72
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
15 property plant and equipment continued
finance leases
the net book value of fixtures fittings and equipment includes £2m 2006 £2m in respect of assets held under finance leases 
the assets are pledged as security for the finance lease liabilities
net book value
the split of the net book value of land and buildings is as follows
2007 2006
£m £m
freehold 3824 2799
leasehold
– unexpired term of more than 50 years 325 222
– unexpired term of 50 years or less 145 149 
4294 3170 
in addition to the above premiums paid on acquiring a new lease are classified in the balance sheet as prepayments of rentals 
under the leases at 29 september 2007 an amount of £12m 2006 £14m was included in the balance sheet
16 inventories
2007 2006
£m £m
work in progress

15 18
goods held for resale 23 24 
38 42 
work in progress is in respect of property developments
17 trade and other receivables
2007 2006
£m £m
trade receivables 11
other receivables 39 54
prepayments 29 26 
69 81 
all amounts fall due within one year
trade and other receivables are noninterest bearing
18 noncurrent assets held for sale
assets held for
disposal group sale total
2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m
pubs  bars
land and buildings – 70 4 4 4 74
fixtures fittings and equipment – 10 1 1 1 11 
– 80 5 5 5 85
restaurants
land and buildings – – 1 2 1 2
fixtures fittings and equipment – – – 1 – 1 
– – 13 13 
total – 80 6 8 6 88 
fair value adjustments on classification 
as noncurrent assets held for sale – – 5 3 5 3  73 mitchells  butlers
annual report and accounts 2007
18 noncurrent assets held for sale continued
noncurrent assets held for sale and the disposal group comprise certain operating properties which have been approved for sale
such that the carrying amount is expected to be recovered through a sale rather than through continuing use sales are expected
within 12 months from the date of classification the disposal group held for sale in 2006 represents assets which were sold to 
trust inns ltd for £101m on 5 october 2006 in a single transaction this represents the only material disposal included within
‘profits on disposal of properties’ in note 9 ‘exceptional items’
the adjustment on classification as noncurrent assets held for sale forms part of the loss 2006 profit arising on propertyrelated
items in the income statement the carrying values included within the disposal group and assets held for sale categories above are
stated after this adjustment the charge against income is shown as ‘fair value adjustments on classification of noncurrent assets
held for sale’ in note 9 ‘exceptional items’
19 trade and other payables
2007 2006
£m £m
trade payables 80 70
other taxation and social security 50 53
accrued charges 57 82
other payables 56 46 
243 251 
trade payables and other payables are noninterest bearing
20 borrowings
2007 2006
current noncurrent current noncurrent
liabilities liabilities total liabilities liabilities total
£m £m £m £m £m £m
securitised debt

40 2316 2356 39 2374 2413
other borrowings 192 – 192–––
loan notes

2 – 2 2 – 2 
finance leases note 31 – 1 1 – 1 1 
total borrowings 234 2317 2551 41 2375 2416 
this debt is secured as explained on page 71
these loan notes are partially secured by a bank deposit the effective interest rate is 603 2006 468
group
2007 2006
£m £m
analysis by year of repayment
due within one year or on demand 234 41
due between one and two years 43 40
due between two and five years 517 545
due after five years 1757 1790 
t otal borrowings 2551 2416 
securitised debt
on 13 november 2003 a group company mitchells  butlers finance plc issued £1900m of secured loan notes in connection 
with the securitisation of the majority of the group’s uk pubs and restaurants business owned by mitchells  butlers retail limited
the funds raised were mainly used to repay existing bank borrowings of £1243m pay issue costs of £23m and return £501m to
shareholders by way of a special dividend
on 15 september 2006 mitchells  butlers finance plc completed the issue of £655m of further secured loan notes in the form 
of the a4 ab c2 and d1 loan notes as detailed below these were issued under substantially the same terms as the original
securitisation in november 2003 the funds raised were mainly used to return £486m to shareholders by way of a special dividend
and to provide longterm funding for the whitbread pub restaurant sites acquired as part of the issue the original a1 and a3 
loan note tranches were repaid and reissued as a1n and a3n loan notes to take advantage of market rates
reports accounts shareholder
information
operating 
and financial
review
overview 74
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
20 borrowings continued
at 29 september 2007 the loan notes consisted of 10 tranches as follows
initial effective
principal principalinterestprincipal outstanding
borrowed repayment period rate at 29 september 2007 expected
tranche £m interest all by instalments  £m wal
a1n 200 floating 2011 to 2028 569 200 3 years
a2 550 fixed–557 2003 to 2028 601 456 9 years
a3n 250
†
floating 2011 to 2028 592 250
†
3 years
a4 170 floating 2016 to 2028 524 170 6 years
ab 325 floating 2020 to 2032 525 325 6 years
b1 350 fixed–597 2003 to 2023 612 305 7 years
b2 350 fixed–601 2015 to 2028 612 350 17 years
c1 200 fixed–647 2029 to 2030 657 200 22 years
c2 50 floating 2033 to 2034 544 50 6 years
d1 110 floating 2034 to 2036 550 110 6 years
2555
†
2416
†
at 30 september 2006 the loan notes consisted of 10 tranches as follows
initial effective
principal principalinterestprincipal outstanding
borrowed repayment period rate at 30 september 2006 expected
tranche £m interest all by instalments  £m wal
a1n 200 floating 2011 to 2028 569 200 4 years
a2 550 fixed–557 2003 to 2028 601 482 10 years
a3n 250
†
floating 2011 to 2028 592 250
†
4 years
a4 170 floating 2016 to 2028 524 170 7 years
ab 325 floating 2020 to 2032 525 325 7 years
b1 350 fixed–597 2003 to 2023 612 318 8 years
b2 350 fixed–601 2015 to 2028 612 350 18 years
c1 200 fixed–647 2029 to 2030 657 200 23 years
c2 50 floating 2033 to 2034 544 50 7 years
d1 110 floating 2034 to 2036 550 110 7 years
2555
†
2455
†
†
includes the fair value impact of £45m 2006 £26m in respect of the currency swaps
after the effect of interest rate swaps
the expected remaining weighted average life ‘wal’ is based on the amortisation profile of the individual note tranches and assumes refinancing of the notes on
the margin stepup dates the margin stepup dates as at 29 september 2007 are set out below
the notes are secured on the majority of the group’s property and future income streams therefrom all of the floating rate notes 
are fully 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 margin stepup date post stepup margin
a1n 3 month libor 018 december 2010 045
a3n 3 month us libor 018 december 2010 045
a4 3 month libor 023 december 2013 058
ab 3 month libor 024 december 2013 060
c2 3 month libor 075 december 2013 188
d1 3 month libor 085 december 2013 213
the overall cash interest rate payable on the loan notes is 57 after taking account of interest rate hedging and the cost of the
provision of a financial guarantee provided by ambac in respect of the class a notes
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 these include 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 
at 29 september 2007 mitchells  butlers retail limited had cash and cash equivalents of £89m 2006 £73m which were governed
by the covenants associated with the securitisation of this amount £9m 2006 £8m representing disposal proceeds was held 
on deposit in a secured account ‘restricted cash’ 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 75 mitchells  butlers
annual report and accounts 2007
20 borrowings continued
the carrying value of the securitised debt in the group balance sheet at 29 september 2007 is analysed as follows
2007 2006
£m £m
principal outstanding at beginning of period 2429 1824
further loan note issue – 1078
principal repaid during the period 39 460
exchange on translation of dollar loan notes 19 13
principal outstanding at end of period 2371 2429
deferred issue costs 20 21
accrued interest 55 
carrying value at end of period 2356 2413 
at 29 september 2007 the group had the following committed borrowing facilities
2007 2006
undrawn committed borrowing facilities £m £m
unutilised facilities expire
within one year 295 295
between two and five years 108 300 
403 595 
on 28 september 2006 the group entered into a three year £300m revolving credit facility for general business purposes which
incurs interest at libor plus a margin based on the prevailing level of group net debtebitda as at 29 september 2007 the
group has drawn an amount of £192m against this facility
21 financial instruments
an explanation of the group’s financial instrument risk management objectives policies and strategies is set out in the discussion 
of treasury policies on page 21 in the operating and financial review derivative financial instruments are not used for trading or
speculative purposes
the primary treasury objectives of the group are to identify and manage the financial risks that arise in relation to underlying
business needs if appropriate the group uses financial instruments and derivatives to manage these risks
financial risk management
the main risks which impact the group result from movements in interest rates and foreign exchange rates derivative financial
instruments principally interest rate and foreign currency swaps are used to manage these risks and are described below
interest rate risk
the group uses 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 derivatives the group minimises the volatility in its financial statements through the
adoption of hedge accounting provisions where appropriate
foreign currency risk
the group’s foreign exchange exposure primarily results from the issue of us41875m of class a3n floating rate notes which 
form part of the securitised debt see note 20 at issuance of the notes the group entered into a cross currency interest rate swap 
to manage the foreign currency exposure resulting from both the us principal and the interest elements of the notes
after taking into account these hedging arrangements the group does not have a material profit and loss account exposure to
movements in foreign exchange rates on monetary assets and liabilities in addition the group is predominantly uk based and
therefore does not have a significant currency exposure from its operations
credit risk
there are no significant concentrations of credit risk within the group the maximum credit risk exposure relating to financial assets
is represented by carrying value as at the balance sheet date
reports accounts shareholder
information
operating 
and financial
review
overview 76
notes to the financial statements
continued
21 financial instruments continued
derivative financial instruments
cash flow hedges
at 29 september 2007 the group held 10 2006 10 interest rate swap contracts with a nominal value of £1105m 2006 £1105m
designated as a hedge of the cash flow interest rate risk of £1105m 2006 £1105m of the group’s floating rate borrowings
comprising the a1n a3n a4 ab c2 and d1 loan notes
the cash flows occur quarterly receiving a floating rate of interest based on libor and paying a fixed rate of 48938 2006 48938
the contract maturity dates match those of the hedged item the 10 interest rate swaps above are held on the balance sheet at fair
value which is an asset of £36m 2006 £33m liability
at 29 september 2007 the group held 1 2006 1 cross currency interest rate swap contract with a nominal value of £250m 2006
£250m designated as a hedge of the cash flow interest rate and currency risk of £250m 2006 £250m of the group’s a3n floating
rate us41875m borrowings the cross currency interest rate swap is held on the balance sheet at a fair value liability of £48m 
2006 £29m liability
the cash flows occur quarterly receiving a floating rate of interest based on us libor and paying a fixed rate in sterling of
54445 2006 54445
changes in cash flow hedge fair values are recognised directly in the hedging reserve in equity to the extent that the hedges are
effective the cash flow hedges detailed above have been assessed as being highly effective during the financial period and are
expected to remain highly effective over the remaining contract lives
during the period a gain of £55m 2006 £22m loss on cash flow hedges was recognised directly in equity a loss of £15m 2006
£16m was removed from equity and included in the group income statement for the period
derivative financial instruments which do not qualify for hedge accounting 
following the comprehensive review of the group’s options for releasing value from its property portfolio the group announced on 
21 may 2007 its intention to form a property joint venture with r20 in the final stage of the planned transaction the group and r20
separately entered into a number of derivative transactions which were intended to be contributed to the joint venture their purpose was
to fix the variable cash flows resulting from the inflation linked rental payments receivable by the proposed property joint venture and the
libor linked interest payments on the new debt as well as to insulate the group from movements in the fair value of its fixed rate debt
mitchells  butlers
annual report and accounts 2007 77 mitchells  butlers
annual report and accounts 2007
21 financial instruments continued
whilst these instruments provide an economic hedge against the future anticipated cash flows associated with a property based
refinancing they do not qualify for hedge accounting as defined in ias39 movements in their fair values are therefore recognised
directly in the group income statement within exceptional finance costs the total fair value movement of these instruments during
the year reported within exceptional finance costs was £221m and is analysed further below
fair value fair value
2007 2006
note £m £m
interest rate derivative transactions
54390 interest rate swap a 39 – 
54390 interest rate swap a 39 – 
55705 interest rate swap b 43 – 
52152 interest rate swap c 58 – 
gilt hedges – combined notional principal of £1385m b 34 – 
inflation derivative transactions
31775 inflation swaps d 154 – 
221 – 
a the two 54390 forward starting interest rate swaps were entered into in july 2007 and both have a notional principal of
£1105m under the first swap the group receives fixed rate interest at 54390 and pays floating rate interest at libor and
under the second swap the group pays fixed rate interest at 54390 and receives floating rate interest at libor their purpose 
is to enable the movements in the fair value of the group’s existing securitisation hedges to be recorded for the benefit of the
proposed property based financing entity from the period that a transaction is executed the start date of the swaps will be
dependent upon the date of execution of the property based refinancing the maturity date is 15 september 2036
b the 55705 forward starting interest rate swap was executed in july 2007 and has a notional principal of £1300m the group
pays fixed rate interest at 55705 and receives floating rate interest at libor four reverse gilt locks with a combined notional
principal of £1385m were executed in july 2007 to mitigate against movements in the fair value of the group’s existing fixed
rate bonds the purpose of the swap is to replicate the impact of the group’s existing fixed rate debt so that movements in the
fair value from the transaction date would be for the benefit of the proposed property based financing entity the reverse gilt
locks mitigate against movements in the fair value of the group’s fixed rate debt offsetting the movement in fair value of the
55705 interest rate swap the start date of the swap will be dependent upon the date of execution of the property based
refinancing the maturity date is 15 september 2030 the reverse gilt locks all have a maturity date of 5 december 2007
c the 52152 forward starting interest rate swap was entered into in july 2007 and has an accrediting and amortising notional
principal of £990m the group pays fixed rate interest at 52152 and receives floating rate interest at libor the purpose 
of the swap is to hedge against libor movements associated with the incremental debt intended to be raised by the proposed
property based financing entity the start date of the swap will be dependent upon the date of execution of the property based
refinancing the maturity date is 15 september 2037
d in july 2007 the group entered into two forward starting inflation swaps with a notional quarterly principal of £30m each 
the group receives an annual fixed increase of 31775 and pays a variable cash flow based on annual increases in the retail
price index within a collar of 0 and 5 the two inflation swaps are intended to fix the expected rental income stream
receivable by the proposed property based financing entity which would increase annually by the retail price index subject to a
collar of 0 and 5 the start date of the swaps will be dependent upon the date of execution of the property based refinancing
the maturity date is 15 june 2037
all cash flows under the above swaps are payable or receivable on a quarterly basis
reports accounts shareholder
information
operating 
and financial
review
overview 78
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
21 financial instruments continued
the fair values of the derivative financial instruments are reflected on the balance sheet as follows these values were measured 
at 29 september 2007 and may be subject to material movements in the period subsequent to the balance sheet date
derivative financial instruments – fair value
noncurrent current current noncurrent
assets assets liabilities liabilities total
£m £m £m £m £m
29 september 2007
cash flow hedges
interest rate swaps 30 6 – – 36
cross currency swap – – 1 47 48
other hedges
interest rate swaps – 39 140 – 101
gilt hedges – 34–– 34
inflation hedges – – 154 – 154
– 73 294 – 221
total 30 79 295 47 233
30 september 2006 – – 7 55 62
the derivatives which do not qualify for hedge accounting have been classified as current assets and current liabilities as appropriate
this reflects the fact that the terms of these hedge contracts at 29 september 2007 contained an early termination provision effective
on 17 december 2007 subject to extension by mutual agreement between the parties these terms have now been extended to be
effective on 17 december 2008 subject to further extension by mutual agreement between the parties
interest rate risk profile
the following tables set out the group’s exposure to interest rate risk and the maturity profile for each class of interest bearing
financial asset and financial liability after taking into account the effect of interest rate swaps
more
within 12 23 34 45 than 5
1 year years years years years years total
£m £m £m £m £m £m £m
29 september 2007
fixed rate
securitised debt 40 42 45 439 33 1757 2356
finance leases – 1 –––– 1
floating rate
cash and cash equivalents 114––––– 114
loan notes 2 ––––– 2
other borrowings 192 ––––– 192
30 september 2006
fixed rate
securitised debt 39 39 42 45 458 1790 2413
finance leases – 1 –––– 1
floating rate
cash and cash equivalents 372 ––––– 372 
loan notes 2 ––––– 2
the interest on fixed rate financial instruments is fixed until the maturity of the instrument the interest on floating rate financial
instruments is reset at intervals of less than one year the other financial assets and liabilities of the group that are not included in
the above tables are noninterest bearing and are therefore not subject to interest rate risk 79 mitchells  butlers
annual report and accounts 2007
21 financial instruments continued
fair values
fair values of financial instruments are disclosed below
2007 2006
book fair book fair
value value value value
£m £m £m £m
primary financial instruments held or issued to finance
the group’s operations
cash and cash equivalents 117 117 375 375
securitised debt excluding interest rate and currency swaps 2356 2408 2413 2542
loan notes 2 2 2 2
finance leases 1 1 1 1
provisions 1 1 3 3
derivative financial instruments held to manage the 
interest rate and currency profile
interest rate swaps
– asset 75 75 – –
– liability 140 140 33 33
currency swaps

48 48 29 29
inflation swaps 154 154 – –
reverse gilt locks 34 34 – –
2476 2528 2106 2235
includes £45m 2006 £26m relating to currency movements on the retranslation of the us41875m a3n loan note included within net debt see note 28
the various tranches of the securitised debt have been valued using period end quoted offer prices 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
these amounts are based on quotations from counterparties and take into consideration interest and exchange rates prevailing at 
the balance sheet date other financial assets and liabilities are either shortterm in nature or book values approximate to fair values
reports accounts shareholder
information
operating 
and financial
review
overview 80
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
22 deferred tax
the deferred tax included in the group balance sheet and group income statement is as follows
2007 2006
restated
£m £m
deferred tax liability
accelerated capital allowances 135 145
rolled over and held over gains 180 187
unrealised gains on revaluations 383 133
depreciated nonqualifying assets 25 29
t otal deferred tax liability 723 494 
deferred tax asset
retirement benefit obligations note 8 532
sharebased payments 20 24
derivative financial instruments 49 9
shortterm temporary differences 13 
t otal deferred tax asset 75 68 
deferred tax in the income statement
accelerated capital allowances 10 4
retirement benefit obligations 18 10
rolled over and held over gains 7 2
sharebased payments 1 4
shortterm temporary differences 23
depreciated nonqualifying assets 4 3
derivative financial instruments 60 1 
unrealised losses on revaluations 13 –
t otal deferred tax creditcharge in the income statement 73 9 
restated in respect of a prior year adjustment see note 2
unrecognised tax losses
at the balance sheet date the group has unused losses of £13m 2006 £13m available for offset against future profits
a deferred tax asset has not been recognised on tax losses with a value of £5m 2006 £5m because it is not certain that future
taxable profits will be available against which the group can utilise the benefit these tax losses can be carried forward indefinitely
tax consequences arising from the payment of dividends
there are no tax consequences attaching to the payment of dividends by the group to its shareholders
23 provisions
property
leases
£m
at 30 september 2006 3
additions –
utilised 1
amount released in the year 1
at 29 september 2007 1
onerous property provisions comprise future rents payable net of rents receivable on onerous and vacant property leases the leases
extend for periods of up to seven years 2006 eight 81 mitchells  butlers
annual report and accounts 2007
24 called up share capital
2007 2006
number of shares £m number of shares £m
authorised
ordinary shares of 8
13
⁄ 24p each 1181130148 101 – –
ordinary shares of 7
1
⁄ 12p each – – 1424304003 101 
1181130148 101 1424304003 101 
called up allotted and fully paid
ordinary shares of 8
13
⁄ 24p each
at start of the financial period 486910806 34 500438040 35
share capital consolidation 83131113 – – –
repurchase and cancellation – – 13527234 1
at end of the financial period 403779693 34 486910806 34 
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
on 17 october 2006 shareholders approved a share capital consolidation on the basis of 34 new ordinary shares for every 41 existing
ordinary shares this provided for all of the authorised ordinary shares of 7
1
⁄ 12p each whether issued or unissued to be consolidated
into new ordinary shares of 8
13
⁄ 24p each which became effective on 18 october 2006
details of options granted under the group’s share schemes are contained in note 7
25 employee share trusts
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 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 with funds provided by the company during the holding period
dividends are paid directly to the participating employees at 29 september 2007 the trustees hill samuel esop trustee limited
were holding 740210 2006 910578 shares in the company of these shares 419918 2006 715583 have been conditionally gifted
to employees and 306304 2006 163716 have been unconditionally gifted to employees with the remaining 13988 2006 31279
shares being 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 executive share option plan performance restricted share plan short term deferred incentive plan sharesave plan and the
rolledover options the ebt purchases shares in the market from time to time using funds provided by the company based on
expectations of future requirements dividends are waived by the ebt at 29 september 2007 the trustees mourant ecs trustees
jersey limited were holding 330239 2006 1299046 shares in the company
2006 share numbers are shown prior to the share consolidation
26 reconciliation of movements in equity
called 
up share capital own
share premium revaluation redemption shares hedging translation retained total
capital account reseve reserve held reserve reserve earnings equity
£m £m £m £m £m £m £m £m £m
at 30 september 2006 as restated 34 14 – 3 12 30 6 1194 1209 
exchange differences – – – – – – 1 – 1 
purchase of own shares – – – – 42 – – – 42
release of own shares – – – – 41 – – 30 11 
credit in respect of 
sharebased payments – – – – – – – 8 8 
t otal recognised income and 
expense – – 828 – – 50 – 49 927
dividends – – – – – – – 538 538
at 29 september 2007 34 14 828 3 13 20 7 683 1576 
reports accounts shareholder
information
operating 
and financial
review
overview 82
notes to the financial statements
continued
26 reconciliation of movements in equity continued
called 
up share capital own
share premium redemption shares hedging translation retained total
capital account reserve held reserve reserve earnings equity
£m £m £m £m £m £m £m £m
at 1 october 2005 as previously reported 35 14 2 12 24 6 1162 1183
prior year adjustment –––––– 99 99
at 1 october 2005 as restated 35 14 2 12 24 6 1063 1084
repurchase and cancellation 1 – 1 – – – 58 58
purchase of own shares – – – 22 – – – 22
release of own shares – – – 22 – – 10 12
credit in respect of sharebased payments – – – – – – 8 8
t otal recognised income and expense – – – – 6 – 247 241
dividends – – – – – – 56 56
at 30 september 2006 as restated 34 14 3 12 30 6 1194 1209 
the group’s main operating subsidiary mitchells  butlers retail limited had retained earnings under uk gaap of £309m at 
29 september 2007 2006 £234m its ability to distribute these reserves by way of dividends is restricted by the securitisation
covenants see note 20
share premium account
the share premium account represents amounts received in excess of the nominal value of shares on issue of new shares
capital redemption reserve
the capital redemption reserve movement arose on the repurchase and cancellation by the company of nil 2006 13527234
ordinary shares during the financial period at a cost of £nil 2006 £58m including expenses the nominal value of the share 
capital cancelled of £nil 2006 £1m was transferred to the capital redemption reserve
revaluation reserve
the revaluation reserve represents the unrealised gain generated on revaluation of the property portfolio with effect from 
29 september 2007 it comprises the excess of the fair value of the portfolio over deemed cost net of related deferred taxation
own shares held
own shares held by the group represent the shares in the company held in treasury ‘treasury shares’ and by the employee 
share trusts
during the financial period the company acquired 1033000 2006 nil shares for treasury at a cost of £74m 2006 £nil released
220606 2006 1589880 shares to employees on the exercise of share options for a total consideration of £04m 2006 £38m 
and consolidated 88443 2006 nil shares on 18 october 2006 the 1241969 shares held in treasury at 29 september 2007 had a
market value of £76m 30 september 2006 518018 shares held had a market value of £31m the aggregate nominal value of the
treasury shares held at 29 september 2007 was £106000 2006 £37000
during the financial period the employee share trusts acquired 4967276 2006 4351933 shares at a cost of £350m 2006 £216m
released 5916545 2006 4282188 shares to employees on the exercise of share options and other share awards for a total
consideration of £105m 2006 £88m and consolidated 189906 2006 nil shares on 18 october 2006 the 1070449 shares held
by the trusts at 29 september 2007 had a market value of £65m 30 september 2006 2209624 shares held had a market value of
£130m further details regarding the employee share trusts are given in note 25
2006 share numbers are shown prior to the share consolidation
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 financial statements of foreign
subsidiaries 
goodwill
goodwill eliminated against reserves at 29 september 2007 was £50m 2006 £50m this arose in respect of acquisitions completed
prior to 30 september 1998
mitchells  butlers
annual report and accounts 2007 83 mitchells  butlers
annual report and accounts 2007
27 cash flow from operations
2007 2006
52 weeks 52 weeks
£m £m
operating profit 309 325
add back operating exceptional items 34 16
operating profit before exceptional items 343 309 
add back
depreciation of property plant and equipment 122 114
amortisation of intangibles computer software 67
amortisation of lease premiums 1–
cost charged in respect of share remuneration 88
defined benefit pension cost less regular cash contributions 3 3 
operating cash flow before exceptional items movements in working capital 
and additional pension contributions 483 441
movements in working capital and pension contributions
decreaseincrease in inventories 4 3
decrease in trade and other receivables 37
increase in trade and other payables 36
movement in provisions 2 1
additional pension contributions note 8 40 20
cash flow from operations before exceptional items 451 430
integration costs paid 4 –
cash flow from operations 447 430 
28 analysis of net debt
2007 2006
£m £m
cash and cash equivalents see below 117 375
securitised debt note 20 2356 2413
other borrowings note 20 192 –
derivatives hedging balance sheet debt

note 21 45 26
loan notes note 20 2 2
finance leases note 20 1 1
2479 2067
represents the element of the fair value of currency swaps hedging the balance sheet value of the group’s us dollar denominated loan notes see note 21 this amount
is disclosed separately to remove the impact of exchange movements which are included in the securitised debt amount
cash and cash equivalents
cash and cash equivalents which are presented as a single class of assets on the face of the balance sheet comprise cash at bank 
and in hand of £80m 2006 £260m plus cash deposits with an original maturity of three months or less of £37m 2006 £115m
29 movement in net debt
2007 2006
52 weeks 52 weeks
£m £m
net decreaseincrease in cash and cash equivalents 258 176
add back cash flows in respect of other components of net debt
proceeds from cash deposits with a maturity of greater than three months – 1
repayment of principal in respect of other loans –1
repayment of principal in respect of securitised debt 39 460 
proceeds of issue of securitised debt – 1078
proceeds of issue of other borrowings 192 –
increase in net debt arising from cash flows ‘net cash flow’ per note 30 411 442
noncash movements 1 –
increase in net debt 412 442
opening net debt 2067 1625
closing net debt 2479 2067
reports accounts shareholder
information
operating 
and financial
review
overview 84
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
30 net cash flow
2007 2006
52 weeks 52 weeks
£m £m
operating profit before exceptional items 343 309
depreciation and amortisation 129 121 
ebitda before exceptional items

472 430
working capital movement 89
other noncash items 11 11
additional pension contributions note 8 40 20
cash flow from operations before exceptional items 451 430
net capital expenditure

99 583
cash flow from operations before exceptional items and after net capital expenditure 352 153
integration costs paid 4 –
cash flow from operations after net capital expenditure 348 153
interest paid 151 115
interest received 68
t ax paid 33 48
dividends paid 538 56
purchase of own shares 46 76
proceeds on release of own shares held 11 12
defence costs note 9 – 4
expenditure associated with refinancing 4 10
corporate restructuring costs 4 –
net cash flow note 29 411 442
earnings before interest tax depreciation amortisation and exceptional items
comprises purchases of property plant and equipment and intangibles less proceeds from the sale of property plant and equipment
31 financial commitments
leases
the vast majority of the group’s leases are industry standard uk pub or commercial property leases which provide for periodic rent
reviews to open market value and enjoy statutory rights to renewal on expiry they generally do not contain conditions relating to
rent escalation rights to purchase concessions residual values or other material provisions of an unusual nature
operating lease commitments – group as lessee
total future minimum lease payments under noncancellable operating leases are as follows
2007 2006
£m £m
due within one year 48 49
between two and five years 158 159
after five years 556 601 
762 809 
the future minimum rentals expected to be received under noncancellable subleases as at 29 september 2007 amounted 
to £25m 2006 £27m 85 mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview
31 financial commitments continued
operating lease receivables – group as lessor 
total future minimum lease receipts under noncancellable operating leases are as follows
2007 2006
£m £m
due within one year 77
between two and five years 23 21
after five years 31 36 
61 64 
lease income recognised in the year was as follows
2007 2006
52 weeks 52 weeks
£m £m
standard lease income 9 10 
finance lease commitments – group as lessee
total future minimum lease payments due under finance leases are as follows
2007 2006
£m £m
due within one year ––
between two and five years 11 
11 
due to the timing of the expiry of the finance lease commitments there is no material difference between the total future minimum
lease payments and their present value
finance leases relate to various items of fixtures fittings and equipment see note 15
capital commitments
2007 2006
£m £m
contracts placed for expenditure on property plant and equipment not provided
for in the financial statements 26 28 
32 contingent liabilities
the group has given indemnities in respect of the disposal of certain companies previously within the six continents group 
it is the view of the directors that such indemnities are not expected to result in financial loss to the group 86
notes to the financial statements
continued
mitchells  butlers
annual report and accounts 2007
33 related party disclosures
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation as such
there were no transactions with related parties requiring disclosure under ias 24 ‘related party disclosures’ during either the current
year or the previous year
mitchells  butlers plc is the beneficial owner of all of the equity share capital either itself or through subsidiary undertakings 
of the following principal operating companies
country of country of 
name of subsidiary incorporation operation nature of business
mitchells  butlers retail ltd england and wales united kingdom leisure retailing
mitchells  butlers retail no 2 ltd england and wales united kingdom leisure retailing
mitchells  butlers property ltd england and wales united kingdom property management
mitchells  butlers leisure retail ltd england and wales united kingdom service company
mitchells  butlers finance plc england and wales united kingdom finance company
mitchells  butlers germany gmbh

germany germany leisure retailing
standard commercial property developments ltd

england and wales united kingdom property development
shares held directly by mitchells  butlers plc
a full list of subsidiary undertakings will be annexed to the next annual return of mitchells  butlers plc to be filed with the registrar
of companies
compensation of key management personnel of the group
2007 2006
£m £m
shortterm employee benefits 43 
postemployment benefits 22 
sharebased payments 44 
10 9 
only employees of mitchells  butlers plc 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 87 mitchells  butlers
annual report and accounts 2007
five year review
income statement information
ifrs uk gaap
pro forma
2007 2006 2005 2004 2003 2003
52 weeks 52 weeks 52 weeks restated restated restated
£m £m £m £m £m £m
revenue
pubsbars 968 958 939 913 873 873
restaurants 908 762 684 641 614 614 
retail 1876 1720 1623 1554 1487 1487
scpd 18 – 8 6 17 17 
1894 1720 1631 1560 1504 1504 
operating profit before exceptional items
pubsbars 191 179 175 173 172 172
restaurants 145 130 113 99 92 92 
retail 336 309 288 272 264 264
scpd 7 – 1 1 2 2 
343 309 289 273 266 266
operating exceptional items 11 7 4 2 – 5
lossprofit arising on property related items

23 23 1 2 – –
t otal operating profit

309 325 286 273 266 261
nonoperating exceptional items ––––– 42
profit before interest 309 325 286 273 266 219
finance charge – – – – 76 –
interest on net debt 147 109 103 101 – 55
exceptional interest charge 221 4 – 2 – 8
net finance incomecharge on pensions 11 8 3 1 2 2
lossprofit before taxation 48 220 186 171 188 154
t axation creditcharge 38 25 59 53 61 37
lossprofit for the financial year 10 195 127 118 127 117 
lossearnings per share
basic 25p 397p 249p 211p – 159p
diluted 25p 388p 245p 210p – 159p
adjustedpro forma 355p 293p 254p 209p 173p 192p
adjustedpro forma as reported in year – – – 222p 184p –
dividends paid and proposed

normal dividends £m 57 53 54 49 – 29
special dividends £m 486 – – 501 – –
normal dividends per share 1425p 1225p 1075p 950p – 565p
restated on the full adoption of frs 17 ‘retirement benefits’
lossprofit arising on property related items has been reclassified under uk gaap in 2004 and prior in order to be consistent with the ifrs presentation
dividend information for all years represents interim and final dividends for the year presented
results for 2005 are presented on a 52 week basis to aid comparability with previous years the 53 week 2005 results under both
ifrs and uk gaap are available in full from the company’s website wwwmbplccomifrs the 2005 results on a 52 week basis 
are unaudited
the mitchells  butlers group was created on its separation from six continents on 15 april 2003 significant changes were made 
to the financing structure of the group which resulted in the replacement of intercompany balances owed to six continents with
external debt in addition the mitchells  butlers group no longer benefited from the six continents group tax arrangements that
were in place prior to the separation the pro forma group income statement for 2003 therefore present the results on the basis 
that the post separation financing and taxation structure had been in place since 1 october 2002 the pro forma income statement
is also stated before exceptional items
adjusted earnings per share is stated after removing the impact of exceptional items less tax thereon
the adjustments required to make uk gaap historic information consistent with that presented under ifrs relate to sharebased
payment charges and the different calculation basis of deferred tax under ifrs
reports accounts shareholder
information
operating 
and financial
review
overview ifrs uk gaap
2007 2006 2005 2004 2003
restated restated restated restated
£m £m £m £m £m
goodwill and other intangible assets 17 22 26 10 11
property plant and equipment 5030 3867 3447 3509 3522
lease premiums 11 13 16 – –
t otal noncurrent assets 5058 3902 3489 3519 3533 
inventories 38 42 39 43 43
operating receivables 68 80 77 82 84 
noncurrent assets held for sale 6 88 9 – –
operating payables 240 243 220 197 176
net current operating liabilities 128 33 95 72 49
t otal operating assets less current operating liabilities 4930 3869 3394 3447 3484
provisions 1 3 4 2 4
net operating assets 4929 3866 3390 3445 3480
external net debt 2479 2067 1625 1632 1228
derivative financial instruments 188 36 35 – –
corporate taxation 18 22 60 59 50
deferred taxation 648 426 435 182 174
pension liabilities 18 99 151 114 170
proposed dividend – – – 34 29
balances relating to exceptional items – 3 – 1 4
nonoperating payables 2 4 – – –
net assets 1576 1209 1084 1423 1825 
restated on the full adoption of frs 17 ‘retirement benefits’
restated in respect of a prior year adjustment see note 2 to the financial statements
five year review
balance sheet information
88 mitchells  butlers
annual report and accounts 2007 89 mitchells  butlers
annual report and accounts 2007
five year review
cash flow information
ifrs uk gaap
pro forma
2007 2006 2005 2004 2003 2003
restated restated restated
£m £m £m £m £m £m
operating profit before exceptional items 343 309 295 273 266 266
depreciation and amortisation 129 121 116 108 99 99
ebitda

472 430 411 381 365 365 
other noncash items 11 11 7 14 1 1
working capital movement 8 9 16 28 7 7 
additional pension contributions 40 20 30 40 27 27
net cash flow from operations

451 430 404 383 344 344
net capital expenditure 99 583 110 99 103 103
operating cash flow after capital expenditure

352 153 294 284 241 241 
net interest paid 145 107 102 98 49
t ax paid 33 48 43 34 44
normal dividends paid 52 56 50 44 – 
special dividends paid 486 – – 501 – 
issue of ordinary shares – – 2 8 4 
purchase of own shares 46 76 101 12 –
proceeds on release of own shares held 11 12 14 1 –
operating exceptional expenditure – – 4 5 38
expenditure associated with refinancing 4 10 – 22 1
facility fees paid – – – – 15
defence costs note 9 – 4 – – – 
corporate restructuring costs note 9 4 – – – –
integration costs paid note 9 4 – – – –
net cash flow 411 442 10 423 241 98 
restated on the full adoption of frs 17 ‘retirement benefits’
before exceptional items
all years are for 52 week periods with the exception of 2005 which is a 53 week period
reports accounts shareholder
information
operating 
and financial
review
overview 2007 2006
notes £m £m
fixed assets
investments 7 1739 1738
current assets
debtors 8 676 622
derivative financial instruments 10 73 –
investments 2 114
cash at bank and in hand 27 172 
778 908
creditors amounts falling due within one year 9 2022 1692
derivative financial instruments 10 82 –
net current liabilities 1326 784
net assets before net pension liabilities 413 954
net pension liabilities 3 13 65
net assets 400 889 
capital and reserves
called up share capital 11 12 34 34
share premium account 12 14 14
capital redemption reserve 12 33
profit and loss account reserve 12 349 838 
equity shareholders’ funds 400 889 
signed on behalf of the board
karim naffah tim clarke
director director
28 november 2007 28 november 2007
the accounting policies and the notes on pages 92 to 99 form an integral part of these financial statements
mitchells  butlers plc – 
parent company balance sheet
29 september 2007
90 mitchells  butlers
annual report and accounts 2007 91 mitchells  butlers
annual report and accounts 2007
independent auditors’ 
report to the members of
mitchells  butlers plc
we have audited the parent company
financial statements of mitchells  butlers
plc for the year ended 29 september 2007
which comprise a balance sheet and the
related notes 1 to 14 these parent
company financial statements have been
prepared under the accounting policies 
set out therein we have also audited 
the information in the directors’
remuneration report that is described 
as having been audited 
we have reported separately on the 
group financial statements of mitchells 
 butlers plc for the year ended 
29 september 2007
this report is made solely to the
company’s members as a body in
accordance with section 235 of the
companies act 1985 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 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 company’s members as
a body for our audit work for this report
or for the opinions we have formed
respective responsibilities of 
directors and auditors
the directors’ responsibilities for
preparing the annual report the
directors’ remuneration report and 
the parent company financial statements
in accordance with applicable united
kingdom law and accounting standards
united kingdom generally accepted
accounting practice are set out in the
statement of directors’ responsibilities
our responsibility is to audit the parent
company financial statements and the part
of the directors’ remuneration report to
be audited in accordance with relevant
legal and regulatory requirements and
international standards on auditing 
uk and ireland
we report to you our opinion as to
whether the parent company financial
statements give a true and fair view and
whether the parent company financial
statements and the part of the directors’
remuneration report to be audited have
been properly prepared in accordance
with the companies act 1985 we also
report to you whether in our opinion the
information given in the parent company
directors’ report is consistent with the
financial statements 
in addition we report to you if in our
opinion the company has not kept
proper accounting records if we have 
not received all the information and
explanations we require for our audit 
or if information specified by law
regarding directors’ remuneration and
other transactions is not disclosed
we read other information contained 
in the annual report and consider
whether it is consistent with the audited
parent company financial statements 
the other information comprises only 
the operating and financial review the
directors’ report the corporate governance
statement the audit committee report
and the unaudited part of the directors’
remuneration report we consider the
implications for our report if we become
aware of any apparent misstatements or
material inconsistencies with the parent
company financial statements our
responsibilities do not extend to any 
other information
basis of audit opinion
we conducted our audit in accordance
with international standards on auditing
uk and ireland issued by the auditing
practices board an audit includes
examination on a test basis of evidence
relevant to the amounts and disclosures 
in the parent company financial
statements and the part of the directors’
remuneration report to be audited 
it also includes an assessment of the
significant estimates and judgments 
made by the directors in the preparation
of the parent company financial
statements and of whether the accounting
policies are appropriate to the company’s
circumstances consistently applied and
adequately disclosed
we planned and performed our audit 
so as to obtain all the information and
explanations which we considered
necessary in order to provide us with
sufficient evidence to give reasonable
assurance that the parent company
financial statements and the part of 
the directors’ remuneration report 
to be audited are free from material
misstatement whether caused by 
fraud or other irregularity or error 
in forming our opinion we also evaluated
the overall adequacy of the presentation 
of information in the parent company
financial statements and the part of 
the directors’ remuneration report to 
be audited
opinion
in our opinion
• the parent company financial statements
give a true and fair view 
in accordance with united kingdom
generally accepted accounting practice
of the state of the company’s affairs as
at 29 september 2007 
• the parent company financial statements
and the part of the directors’
remuneration report to be audited have
been properly prepared in accordance
with the companies act 1985 and
• the information given in the directors’
report is consistent with the parent
company financial statements
ernst  young llp
registered auditors
london
28 november 2007
reports accounts shareholder
information
operating 
and financial
review
overview 1 accounting policies
basis of accounting
the financial statements have been
prepared under the historic cost
convention they comply with applicable
accounting standards in the united
kingdom
fixed asset investments
the company’s investments in group
undertakings are held at cost less provision
for impairment
deferred taxation
deferred tax assets and liabilities are
recognised subject to certain exceptions
in respect of all material timing differences
between the recognition of gains and
losses in the financial statements and for
tax purposes those timing differences
recognised include accelerated capital
allowances and shortterm timing
differences timing differences not
recognised include those relating to the
revaluation of fixed assets in the absence
of a commitment to sell the assets 
the gain on sale of assets rolled into
replacement assets and the distribution 
of profits from overseas companies 
in the absence of any commitment by 
the company to make the distribution 
deferred tax assets are recognised to the
extent that it is regarded as more likely
than not that they will be recovered
deferred tax is calculated on a non
discounted basis at the tax rates that are
expected to apply in the periods in which
timing differences reverse based on tax
rates and laws enacted or substantively
enacted at the balance sheet date
employee benefits
i pension obligations
the company has both defined benefit and
defined contribution pension arrangements
the liability recognised in the balance
sheet in respect of the company’s defined
benefit arrangements is the present value
of the defined benefit obligation less the
fair value of the scheme assets shown net
of deferred tax the cost of providing
benefits is determined using the projected
unit credit method as determined
annually by qualified actuaries the
current service cost of providing pension
benefits to employees together with the
cost of any benefits relating to past service
is charged to operating profit and
included in staff costs the interest cost
and the expected return on assets are
shown as a net amount of finance cost 
or income adjacent to interest actuarial
gains and losses are recognised
immediately in the statement of total
recognised gains and losses
for the company’s defined contribution
arrangements the charge against profit 
is equal to the amount of contributions
payable
ii sharebased compensation
the company operates a number of
equitysettled sharebased 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 generally recognised
over the vesting period and is adjusted 
for the estimated effect on the number 
of shares that will eventually vest of non
marketbased vesting conditions and
forfeitures due to employees leaving the
employment of the company fair values
are calculated using a combination of
blackscholes binomial and monte carlo
simulation models depending on the
conditions attached to the particular 
share scheme
own shares
the cost of own shares held in treasury
‘treasury shares’ or by the company’s
employee share trusts for the purpose 
of fulfilling obligations in respect of 
the group’s employee share plans are
deducted from shareholders’ funds in the
company and group balance sheet
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
foreign currencies
transactions in foreign currencies are
recorded at the exchange rates ruling on
the dates of the transactions adjusted for
the effects of any hedging arrangements
monetary assets and liabilities denominated
in foreign currencies are translated into
sterling at the relevant rates of exchange
ruling at the balance sheet date
this applies to the euro loan from
mitchells  butlers germany gmbh
which is a monetary item converted at the
period end rate with exchange differences
arising passing through the profit and loss
account and the euro investment in
mitchells  butlers germany gmbh
which is a nonmonetary item and
therefore should be held at cost
however the company applies fair 
value hedge accounting in accordance
with frs 26 in order to hedge the 
longterm element of the euro loan from
mitchells  butlers germany gmbh
against part of the investment in mitchells
 butlers germany gmbh foreign
exchange differences arising on
translation of both of these items using
the period end rate are taken to the 
profit and loss account the remainder 
of the investment in mitchells  butlers
germany gmbh is held at cost as
described above
92 mitchells  butlers
annual report and accounts 2007
notes to the parent company 
financial statements 93 mitchells  butlers
annual report and accounts 2007
derivative financial instruments
the company uses interest rate swaps 
and gilt hedges to hedge against the
mitchells  butlers group’s exposure to
changes in interest rates and movements
in the value of the group’s fixed rate debt
the hedged items are held by a subsidiary
undertaking derivative financial
instruments are not used for trading or
speculative purposes
interest rate swap contracts are initially
measured at fair value on the contract
date and are remeasured to fair value 
at subsequent reporting dates fair value 
is calculated as the present value of the
estimated future cash flows changes in
the fair value of these instruments are
recognised in the profit and loss account
in the period in which the changes arise
profit and loss account
the company has taken advantage of
section 230 of the companies act 1985
and not presented its own profit and loss
account the company recorded a profit
after tax of £50m 2006 £667m less
dividends of £538m 2006 £56m
auditors’ remuneration for audit 
services to the company was £21000
2006 £20000 this is borne by another
group company as are any other costs
relating to nonaudit services see note 5
to the group financial statements
the consolidated financial statements 
of mitchells  butlers plc are required to
comply with the companies disclosure of
auditor remuneration regulations 2005
use of estimates
the preparation of financial statements
requires management to make estimates
and assumptions that affect the amounts
reported in the financial statements and
accompanying notes actual results can
differ from those estimates estimates 
are used when accounting for items 
such as amortisation asset impairments
and pensions
exchange rates
the results of overseas operations have
been translated into sterling at weighted
average rates of exchange for the year of
£1  s148 2006 £1  s146 and euro
denominated assets and liabilities have
been translated into sterling at the rate 
of exchange at the balance sheet date of 
£1  s143 2006 £1  s147
2 recent accounting developments
during the year the accounting standards
board ‘asb’ issued the following
standards all of which have an effective
date after the date of these financial
statements and have not been adopted
early by the company
frs 29 ifrs 7 ‘financial instruments
disclosures’ will require disclosure of
additional information relating to the
company’s financial instruments with
effect from 1 january 2007 the company
will be exempt from the requirements of
this standard as the information will be
included in the consolidated financial
statements of the group
frs 25 ‘financial instruments disclosure
and presentation’ has been revised with
effect from 1 january 2007 to remove
disclosures which are now incorporated
within the scope of frs 29 ifrs 7
‘financial instruments disclosures’
during the year the asb issued an
amendment to frs 17 ‘retirement
benefits’ with effect from 6 april 2007
the company has applied the
amendment early in these financial
statements incorporating the additional
disclosure requirements and valuing the
assets of the defined benefit schemes using
current bid price instead of midmarket
value
3 pensions
the company accounts for pensions
under frs 17 ‘retirement benefits’
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 8 page 63 to the consolidated
financial statements
pension costs are assessed in accordance
with the advice of the scheme’s qualified
actuaries the company’s total pension
cost included within operating profit for
the 52 weeks ended 29 september 2007
under frs 17 was £14m 2006 £15m
comprising £13m 2006 £14m in 
respect of the defined benefit pension
arrangements and £1m 2006 £1m 
in respect of the defined contribution
arrangements
the valuations used for frs17 purposes
are based on the preliminary results of 
the latest full actuarial valuation carried 
out at 31 march 2007 and expected to 
be finalised in december 2007 updated 
by the independent qualified actuaries 
to 29 september 2007 scheme assets are
stated at market value at 29 september
2007 and the liabilities of the schemes
have been assessed as at the same date
using the projected unit method as the
defined benefit sections of the pension
plans are now closed to new members 
the current service cost as calculated
under the projected unit method will
increase as members approach retirement
the principal financial assumptions 
used by the actuaries at the balance sheet
date and the basis of these are contained
within note 8 on page 63 to the consolidated
financial statements
reports accounts shareholder
information
operating 
and financial
review
overview 3 pensions continued
the longterm rates of return on assets at 29 september 2007 shown below form the basis of the calculation of the expected return on
pension scheme assets for the 2008 financial year the 2006 rates shown are used in calculating the 2007 expected return
2007 2006 2005
longterm longterm longterm
rates rates rates
of return of return of return
expected value expected value expected value
£m  £m £m
equities 79 345 75 598 75 563
bonds 59 854 46 488 46 428
property 79 93 75 99 75 90
fair value of assets 1292 1185 1081
present value of scheme liabilities 1310 1281 1229
deficit in the schemes recognised as a liability in the balance sheet 18 96 148
associated deferred tax asset 5 31 49
net pension liabilities 13 65 99
2007 2006
statement of total recognised gains and losses £m £m
actual return less expected return on pension scheme assets 24 43
changes in assumptions underlying the valuation of the scheme 
assets and present value of the scheme liabilities 6 16
actuarial gain recognised 30 27 
history of experience gains and losses 2007 2006 2005 2004 2003
difference between the expected and actual return on scheme assets
amount £m 24 43 100 27 39
percentage of scheme assets 2 4 9 3 5 
experience gains and losses on scheme liabilities
amount £m – – – 20 11
percentage of the present value of the scheme liabilities – – – 2 1
amount recognised in the statement of total recognised gains and losses
amount £m 30 27 7 39 71
percentage of the present value of the scheme liabilities 2 2 1 4 7
the following amounts relating to the company’s defined benefit arrangements have been recognised in the company profit and 
loss account and statement of total recognised gains and losses
2007 2006
52 weeks 52 weeks
profit and loss account £m £m
operating profit
current service cost 13 14
charge to operating profit 13 14
interest
expected return on pension scheme assets 74 69 
interest on pension scheme liabilities 63 61
net finance income in respect of pensions 11 8 
net pension cost before taxation 2 6
94 mitchells  butlers
annual report and accounts 2007
notes to the parent company 
financial statements
continued 95 mitchells  butlers
annual report and accounts 2007
notes to the parent company 
financial statements
continued
3 pensions continued
the table below analyses the movement in the schemes’ net deficit in the period
pension assets pension obligations net deficit
2007 2006 2007 2006 2007 2006
£m £m £m £m £m £m
at beginning of period 1185 1081 1281 1229 96 148
current service cost – – 13 14 13 14
interest cost on benefit obligations – – 63 61 63 61
expected return on plan assets 74 69 – – 74 69 
employee contributions 4 3 4 3 – – 
employer contributions 50 31 – – 50 31 
benefits paid 42 42 42 42 – – 
actuarial gainloss recognised 21 43 9 16 30 27 
at end of period 1292 1185 1310 1281 18 96
4 employees and directors
2007 2006
52 weeks 52 weeks
number number
average number of employees including parttime employees 9 9 
5 sharebased payments
the expense recognised for sharebased payments in the year is £4m 2006 £4m which comprises share option schemes and share
awards to the employees of the company
the company had six sharebased payment schemes all of which are equitysettled in operation during the year these are
described on page 59
the tables on page 60 set out awards and options granted by the company during 2007 and 2006 the company has used separate
option pricing models and assumptions for each plan details of how the fair value of each option was calculated are also included 
on pages 59 and 60
movements in the awards and options over the company’s shares outstanding under these schemes for the years ended 
29 september 2007 and 30 september 2006 in relation to the employees of the mitchells  butlers group are shown on page 61
reports accounts shareholder
information
operating 
and financial
review
overview 5 sharebased payments continued
movements in the awards and options outstanding under these schemes in respect of the employees of the company for the 
periods ended 29 september 2007 and 30 september 2006 are as follows
short term performance share
deferred restricted incentive
incentive plan share plan plan
number of number of number of
shares shares shares
thousands thousands thousands
outstanding at 1 october 2005 679 2677 18 
granted 325 1098 4 
exercised 253 384 –
lapsed – 565 –
outstanding at 30 september 2006 751 2826 22
granted 247 652 2
exercised 253 713 –
lapsed – 295 –
share consolidation
i
– – 4
outstanding at 29 september 2007 745 2470 20
fair value of options granted during the period pence
at 29 september 2007 7215 4776
ii
8795
at 30 september 2006 3541 2758
ii
5150
weighted average remaining contract life years
at 29 september 2007 13 31 –
iii
at 30 september 2006 13 32 –
iii
i the allocated shares in the sip trust were consolidated as part of the share consolidation on 18 october 2006 resulting in a reduction of 3775
ii for the performance restricted share plan the weighted average fair value is shown
iii sip shares are capable of remaining within the sip trust indefinitely while participants continue to be employed by the group
executive share 
option plan sharesave plan rolledover options
weighted weighted weighted
number average number average number average
of shares option price of shares option price of shares option price
thousands pence thousands pence thousands pence
options outstanding at 1 october 2005 5033 2599 42 1754 2742 2749 
granted – – 2 4010 – – 
exercised 3532190 – – 9372697 
lapsed – – – – – – 
options outstanding at 30 september 2006 4680 2630 44 1873 1805 2776 
granted ––––––
exercised 1050 2190 16 1690 922 2803
lapsed ––––––
options outstanding at 29 september 2007 3630 2757 28 1980 883 2748 
options exercisable
at 29 september 2007 2249 2447 – – 883 2748
at 30 september 2006 1571 2190 – – 1805 2776
fair value of options granted during the period pence
at 29 september 2007 – – –
at 30 september 2006 – 1453 –
range of option prices pence
at 29 september 2007 2190 – 3261 1690 – 4010 2597 – 3645
at 30 september 2006 2190 – 3261 1690 – 4010 2597 – 3645
the weighted average share price during the period was 7374p 2006 4580p
summarised information about options over the company’s shares outstanding at 29 september 2007 under the share option
schemes in respect of the employees of the mitchells  butlers group is shown on page 62
96 mitchells  butlers
annual report and accounts 2007
notes to the parent company 
financial statements
continued 97 mitchells  butlers
annual report and accounts 2007
5 sharebased payments continued
summarised information about options outstanding in respect of the employees of the company at 29 september 2007 under 
the share option schemes is as follows
options outstanding options exercisable
weighted weighted
average weighted average weighted 
number remaining average number remaining average
outstanding contract life option price outstanding contract life option price
range of exercise prices pence thousands years pence thousands years pence
performance restricted share plan
negligible
i
2470 31 –
i
–– –
i
executive share option plan
2190 520 57 2190 520 57 2190 
2525 1729 67 2525 1729 67 2525 
3261 1381 77 3261 – – –
3630 69 2757 2249 64 2447
sharesave plan
1690 19 15 1690 – – –
2090 7 05 2090 – – –
4010 2 25 4010 – – –
28 14 1980 – – –
rolledover options
2421p to 3030p 795 32 2649 795 32 2649 
3031p to 3645p 88 04 3645 88 04 3645 
883 29 2748 883 29 2748 
i 
the exercise price relating to the performance restricted share plan is £1 per participating employee per exercise
6 dividends
dividends paid and recognised in equity by the company in the period are disclosed within note 12 on page 68 to the consolidated
financial statements
7 fixed asset investments
shares in group
undertakings
£m
cost
at 30 september 2006 and 29 september 2007 1745 
provision
at 30 september 2006 7
released during year 1
at 29 september 2007 6
net book value
at 29 september 2007 1739
at 30 september 2006 1738 
mitchells  butlers plc is the beneficial owner of all of the equity share capital either itself or through subsidiary undertakings 
of the following principal operating companies
country of country of
name of subsidiary incorporation operation nature of business
mitchells  butlers retail ltd england and wales united kingdom leisure retailing
mitchells  butlers retail no 2 ltd england and wales united kingdom leisure retailing
mitchells  butlers property ltd england and wales united kingdom property management
mitchells  butlers leisure retail ltd england and wales united kingdom service company
mitchells  butlers finance plc england and wales united kingdom finance company
mitchells  butlers germany gmbh germany germany leisure retailing
standard commercial property developments ltd england and wales united kingdom property development
shares held directly by mitchells  butlers plc
a full list of subsidiary undertakings will be annexed to the next annual return of mitchells butlers plc to be filed with the registrar
of companies
reports accounts shareholder
information
operating 
and financial
review
overview 8 debtors
2007 2006
£m £m
amounts owed by group undertakings 625 581 
group relief receivable 50 36 
deferred tax –3 
other debtors –1 
prepayments 11 
676 622 
all amounts fall due within one year
9 creditors amounts falling due within one year
2007 2006
£m £m
borrowings 192 6 
amounts owed to group undertakings 1808 1680 
deferred tax 18 –
other creditors 14
accruals 32 
2022 1692 
borrowings in 2007 comprise £192m drawn down against the three year £300m revolving credit facility entered into on 
28 september 2006 for general business purposes borrowings in 2006 comprise overdrafts which were repayable on demand
10 derivative financial instruments
in advance of the intended property based refinancing a number of derivative instruments were executed by or transferred to the
company to mitigate against movements in the value of the group’s existing fixed rate debt these are explained further in note21
on page 76 to the consolidated financial statements
these instruments do not qualify for hedge accounting within the company as they cannot be designated as a hedge against the 
cash flows of any specific financial instrument anticipated as part of a future property based refinancing they include the two
54390 interest rate swaps the 55705 interest rate swap and the reverse gilt locks described in note 21 on page 77 to the
consolidated financial statements
movements in their fair values are recognised directly in the company’s profit and loss account the total impact of the above
derivative financial instruments during the year was a charge of £9m
11 called up share capital
details of the amount and nominal value of authorised and called up allotted and fully paid share capital are contained in note 24
on page 81 to the consolidated financial statements
98 mitchells  butlers
annual report and accounts 2007 99 mitchells  butlers
annual report and accounts 2007
12 share capital and reserves
profit and loss account
capital
reserve
total share
share share redemption own capital and
capital premium reserve shares other total reserves
£m £m £m £m £m £m £m
at 30 september 2006 34 14 3 12 850 838 889 
purchase of own shares – – – 42 – 42 42
release of own shares held – – – 41 30 11 11
credit in respect of employee share schemes –––– 8 8 8
actuarial gain on pension schemes –––– 30 30 30
deferred tax relating to actuarial gain including effect 
of tax rate change –––– 8 8 8
profit after taxation –––– 50 50 50
dividends –––– 538 538 538
at 29 september 2007 34 14 3 13 362 349 400
the profit and loss account reserve is wholly distributable after the deduction for own shares
included in the profit and loss account reserve is a pension reserve of £13m 2006 £65m which equates to the net pension liabilities
under frs 17
own shares
own shares held by the company represent the shares in the company held in treasury ‘treasury shares’ and by the employee 
share trusts
during the period the company acquired 1033000 2006 nil shares for treasury at a cost of £74m 2006 £nil released 220606
2006 1589880 shares to employees on the exercise of share options for a total consideration of £04m 2006 £38m and
consolidated 88443 2006 nil shares on 18 october 2006 the 1241969 shares held in treasury at 29 september 2007 had a
market value of £76m 2006 518018 shares held had a market value of £31m the aggregate nominal value of the treasury shares
held at 29 september 2007 was £106000 2006 £37000
during the period the employee share trusts acquired 4967276 2006 4351933 shares at a cost of £350m 2006 £216m
released 5916545 2006 4282188 shares to employees on the exercise of share options and other share awards for a total
consideration of £105m 2006 £88m and consolidated 189906 2006 nil shares on the 18 october 2006 the 1070449 shares
held by the trusts at 29 september 2007 had a market value of £65m 2006 2209624 shares held had a market value of £130m
2006 share numbers are shown prior to the share consolidation
13 deferred tax assetliability
£m
at 30 september 2006 34
profit and loss account 39
profit and loss account reserve 8
at 29 september 2007 13
analysed as tax on timing differences related to
2007 2006
£m £m
derivative financial instruments 21 –
sharebased payments 33
pensions 5 31 
deferred tax liabilityasset 13 34
the deferred tax asset in respect of pensions is netted off the pension liability in note 3
14 related party transactions
under frs 8 ‘related party disclosures’ the company is not required to provide related party disclosures in its own financial
statements as they are presented with the consolidated financial statements of the group
reports accounts shareholder
information
operating 
and financial
review
overview electronic communication
shareholders can register to receive 
an email notification of the availability 
of the company’s latest shareholder
communications at the following web 
link wwwmbplccomecomms the website
also enables shareholders to view details 
of their own shareholding or electronically
appoint a proxy to vote on their behalf 
on any poll that may be held at the
forthcoming annual general meeting
following recent changes in legislation 
the company will be seeking authority 
to amend its articles of association at the
2008 agm to enable it to make electronic
communication with shareholders the
default position the company intends 
to enclose communication election cards
with the interim dividend payment
mailing in 2008 shareholders will have
the right to request to receive paper
communications however this presents 
an opportunity for the company to
benefit from reducing costs whilst
reducing its impact on the environment
interim results
the company does not intend to publish
future interim results in hard copy the
interim results will be available online 
at wwwmbplccomreports
amalgamating your share accounts
if you received more than one copy of this
report it may be because the registrar has
more than one record of shareholdings in
your name to ensure that you do not
receive duplicate mailings in future you
can have all your shares amalgamated into
one account by contacting the registrar at
the address below
dividend mandates
shareholders who wish dividends to be
paid directly into a bankbuilding society
account should contact the registrar for 
a dividend mandate form this method 
of payment removes the risk of delay or
loss of dividend cheques in the post and
ensures that your account is credited 
on the due date
dividend reinvestment plan ‘drip’
shareholders can choose to reinvest
dividends received to purchase further
shares in the company through a drip  
a drip application form is available from
the registrar or at the following web link
wwwmbplccomdividends
low cost share dealing service
a simple low cost postal facility for 
buying and selling mitchells  butlers plc
ordinary shares is available through the
company’s registrar information may be
obtained from the registrar’s address
below or at wwwshareviewcoukdealing
individual savings accounts ‘isas’
isas in mitchells  butlers plc ordinary
shares are available through the registrar
and information may be obtained from
the registrar’s address below
share price information
the latest mitchells  butlers plc share
price is available at the following web 
link wwwmbplccomshareprice in the
financial press or on ceefax and teletext
and also on the financial times cityline
service telephone 44 0906 843 0000
calls charged at 60p per minute
sharegift
the orr mackintosh foundation 
operates this charity share donation
scheme for shareholders with small
holdings of shares whose value makes
them uneconomic to sell details can 
be obtained from the registrar or the
sharegift website wwwsharegiftorg or by
calling sharegift on 44 020 7930 3737
corporate social responsibility review
the mitchells  butlers corporate social
responsibility review 2007 is available 
on the company’s website and can be
downloaded directly by visiting
wwwmbplccomcsrreview if you do 
not have access to the internet and would
like a printed copy please write to the
communications department at the
registered office shown below
special dividend and share consolidation
on 25 october 2006 the company paid 
a special dividend of £1 per share to
shareholders on the register at the close of
business on 17 october 2006 as approved
by shareholders on 17 october 2006 the
special dividend was accompanied by 
a consolidation of the company’s share
capital effective from 18 october 2006
whereby shareholders received 34 new
ordinary shares for every 41 existing
ordinary shares held on 17 october 2006
contacts
registered office
27 fleet street
birmingham b3 1jp
telephone 44 0870 609 3000
fax 44 0121 233 2246
registrar
equiniti
aspect house
spencer road
lancing
west sussex
bn99 6da
telephone 0870 241 3930 from the uk
telephone 44 01903 702424 
for nonuk callers
fax 44 01903 702424
 for those with hearing loss a textphone
is available on 0870 600 3950 for uk
callers with compatible equipment
stockbrokers
jpmorgan cazenove limited
merrill lynch international
auditor
ernst  young llp
investment bankers
citigroup
solicitors
allen  overy llp
shareholder information
100 mitchells  butlers
annual report and accounts 2007
key dates 
2007 preliminary results announcement 29 november 2007
final dividend
exdividend date 5 december 2007
record date 7 december 2007
payment date 4 february 2008
annual general meeting 31 january 2008
interim management statement 31 january 2008
announcement of interim results may 2008
interim dividend payment date july 2008
interim management statement july 2008
pre close trading update september 2008
announcement of 2008 preliminary results novdec 2008 overview operating and 
financial review
reports
accounts shareholder information
front cover the trout inn
premium country dining
wolvercote oxford
this page the old contemptibles
town pub 
birmingham
2 group at a glance
4 chairman’s statement
6 chief executive’s review
of the market  strategy
12 key performance
indicators
13 business review
17 financial review
22 risks and uncertainties
24 corporate social
responsibility 
28 directors’ report
30 corporate governance
report
33 audit committee report
35 remuneration report
46 independent auditors’
report to the members 
of mitchells  butlers plc
47 group income statement
48 group statement of
recognised income 
and expense
49 group balance sheet
50 group cash flow
statement
51 notes to the financial
statements
87 five year review
90 mitchells  butlers plc –
parent company 
balance sheet 
91 independent auditors’
report to the members of
mitchells  butlers plc
92 notes to the parent
company financial
statements
100 shareholder information
101 glossary
design and production the paper used in this report is derived from 
carnegieorr sustainable sources
print
royle corporate print
acquired sites
239 pub restaurant sites acquired from
whitbread plc in july 2006
amenity
design décor furniture and facilities
that contribute to the environment and
atmosphere of a pub 
awt average weekly take
the average sales per pub per week
calculated as total sales divided by the
average number of pubs trading during
the period divided by the number of
weeks in the period 
brands
outlets which trade under a common
name or their own individual names
under an externally recognised group
name with a consistent design drinks
range menu service style and
promotional programme
business franchise
an agreement where an entrepreneur
gains access to high quality pubs 
and a sophisticated business support
infrastructure whilst the company 
retains its scale purchasing and overhead
advantages and shares in the trading
upside through a franchise fee the
company receives a commercial rent for
the property and retains the property
ownership
capacity management
the process that seeks to ensure that 
a pub can service maximum volumes at
peak trading times whilst maintaining
customer satisfaction levels
cash flow from operations
the cash generated from the operations
of the company generally defined as
revenues less all operating expenses
cagr
compound annual growth rate
covers
the number of main meals sold
cover turn
the total number of main meals sold
divided by the number of main meals
that could be sold in one sitting
ebitda
earnings before interest tax
depreciation amortisation and
exceptional items
external costs
costs influenced by outside factors 
ie regulatory and energy costs
formats
outlets where to the customer’s eye 
the business trades without any overt
branding or badging but the customer
offer and operating template are
managed to defined standards
gross margin
gross profit divided by sales expressed
as a percentage
gross profit
sales less cost of goods sold expressed 
in monetary terms £s
incremental pretax returns
growth in annual pretax operating
profit expressed as a percentage of the
associated capital investment for sites
which do not have 12 months post
investment trading incremental return 
is estimated based on an annualisation 
of actual postinvestment trading
ifrs
international financial reporting
standards
national minimum wage
the minimum amount an employer
must pay its workers as defined by law
offtrade
any retail outlet which has a licence to
sell alcohol for consumption off the
premises
ontrade
any retail outlet which has a licence 
to sell alcohol for consumption on 
the premises eg pubs restaurants
nightclubs clubs
operating profit
earnings before interest tax and
exceptional items
outlet employment ratio
pub employment costs divided by total
sales expressed as a percentage
posttax cash return
ebitda less tax divided by average net
operating assets less revaluation reserve
plus accumulated depreciation plus
goodwill written off
productivity
sales less hourly paid wages divided by
the number of hours worked
refinancing
the repayment of an existing loan with
the proceeds from a new loan
reit
real estate investment trust
same outlet likeforlike sales growth
the increase in sales performance of all
managed pubs that were trading for the 
two periods being compared expressed 
as a percentage
securitisation
a means of raising finance secured on
identifiable and predictable cash flows
derived from a particular set of assets
share buyback
the purchase in the open market by 
a listed company of its own shares
uninvested likeforlike sales growth
the increase in sales performance 
of those managed pubs that have not
received expansionary investment of
more than £30000 in either year being
compared expressed as a percentage
glossary
101 mitchells  butlers
annual report and accounts 2007
reports accounts shareholder
information
operating 
and financial
review
overview mitchells  butlers plc
27 fleet street
birmingham b3 1jp
tel 44 0 870 609 3000
fax 44 0 121 233 2246
wwwmbplccom
mitchells  butlers plc
annual report and accounts 2007
mitchells  butlers plc annual report and accounts 2007 mitchells  butlers plc
annual review and summary financial statement 2007 purpose
mitchells  butlers has a high quality well located pub 
estate focused on the longterm growth in the informal 
value for money eating and drinkingout markets 
our operational and investment strategy is delivering 
better choice and value to our customers and generating
profitable sales growth which is increasing our property 
values as well as our investment returns – all to the 
benefit of shareholders
contents
2 group at a glance
4 chairman’s statement
6 summary operating and
financial review
6 chief executive’s review
24 corporate social responsibility
25 finance director’s report
27 summary financial statement
28 board of directors
29 executive committee
30 directors’ report
30 corporate governance report
31 remuneration report
35 shareholder information
36 glossary
37 key brands
front cover the white horse
metro professionals
parsons green london 
this page the trout inn
premium country dining
wolvercote oxford  1
operational highlights
£18500
average weekly sales per pub
51
same outlet likeforlike food sales
22
same outlet likeforlike drinks sales
107
million
meals served this year
financial highlights
1 0 1 
revenue £1894m
1 10
operating profit £343m 
before exceptional items
212
earnings per share 355p 
before exceptional items
163
dividend 1425p 2
group at a glance
mitchells  butlers
annual review and summary 
financial statement 2007
mitchells  butlers’ knowhow
our proven expertise at every level combined
with a pub estate of exceptional quality in
prime locations continues to deliver on our
strategy of driving profitable volume growth
and creating shareholder value
increasing
property
values
consumer relevance 
and format evolution
our people
knowhow
value
and volume
strategy
increasing property values
through the successful
implementation of our operational
and investment strategy we are able
to generate further uplifts in asset
values within our high quality freehold
estate for the benefit of shareholders
acquired sites  pg 23
our people
key to the successful operation of
our pubs is our ability to recruit train
and retain the best people we offer
comprehensive training so
experience is not essential however
personality and a passion for
customer service are critical
cask ale training  pg 18
value and volume strategy
our operational strategy is to focus
on value and volume improving the
value we offer our customers leads 
to higher volumes and improved
productivity these gains along with
better purchasing terms enable us 
to reduce costs and then reinvest 
the margin gains in further quality 
and value
pub  carvery  pg 15
consumer relevance and 
format evolution
we strive to anticipate identify and
respond to changing demographic
profiles and consumer expectations
by evolving our brands and formats
sizzling pub co  pg 10 3
mitchells  butlers
annual review and summary 
financial statement 2007
 6
 3
 1
  2 
  1 
4 
 0
4 
food
wine 
soft drinks
beer 
cider
spirits
mab same outlet likeforlike volume growth
estimated market volume growth 
based on bbpaac neilsenons
residential
the majority of our pubs have prime
locations in residential areas and are
therefore well positioned to take advantage
of the growth in eatingout as well as
increasing our drinks market share
75
of sales
1 1 392
pubs
45
food sales mix
31
same outlet likeforlike sales growth
positioned for success
with 3 of the pubs in the uk we 
have a 10 share of pub market sales
this has been achieved through a strategic
positioning of the estate to attractive 
areas of the market which has driven 
our growth particularly in food
£1 85k
2007 average weekly sales per pub
1998 £99k
37
2007 food sales mix
1998 22
107m
2007 no of main meals sold per annum
1998 41m
high street
we have successfully evolved our brands
and formats on the high street over 
a number of years and this has continued
to bear fruit seeing strong growth in 
a competitive market
25
of sales
457
pubs
1 16
food sales mix
30
same outlet likeforlike sales growth
existing sites 
acquired sites
new acquisitions
growth and investment
we have invested a total of £253m in our
pubs over the year this has enabled us
to develop evolve and maintain our high
quality estate with significant returns 
on investment whilst further improving
our relative value proposition in light 
of the level of investment in the overall
ontrade pub market
£11bn
over £11bn

uk expansionary
investment over the last 16 years
20
20

return on investments in the 
core estate over the last two years
20
c20 sales uplift from 
converted acquired sites
 excludes the acquired sites
investments in fy 2007 our market
the pub market is estimated to be worth
over £19bn per annum it has benefited
over the last ten years from the growth
in the popularity of eatingout with
approximately a third of total household
food expenditure now made outside the
home this is in contrast to the more
traditional pub market of draught beer
which has declined down 27 in
volume since 1998
against this background our strategy
has proved exceptionally successful
driving market share gains in all 
key categories
white webbs
toby carvery
enfield
the flask
metro professionals
highgate london
profitable market share gains 4
chairman’s statement
mitchells  butlers
annual review and summary 
financial statement 2007
mitchells  butlers’ results this year reflect
a strong financial performance and we are
pleased with the operational development
across the business the executive team
have been particularly effective in growing
sales and profits despite some significant
economic and cost challenges whilst also
rapidly implementing the conversion of
the high quality whitbread sites acquired
in july 2006 we have extended our
leadership of the eatingout market
serving 107 million meals and generated
significant drinks market share gains 
as a result revenues have risen by 10
operating profits by 11 and earnings per
share before exceptional items by 21
this performance has enabled the board
to recommend a final dividend payment
of 100p per share taking the total
ordinary dividend for the year to 1425p
an increase of 163 this payment is
additional to the special dividend of £486m
paid to shareholders in october 2006 
and reflects the strong growth in earnings
per share as well as our commitment 
to a progressive policy for dividends
since our foundation in 2003 the 
board has had an absolute commitment 
to the creation and delivery of value 
to shareholders whether through organic
growth investment in the business for
high returns the pursuit of value creative
acquisitions or a return to shareholders 
by way of dividends and share buybacks 
with this guiding principle in mind 
and recognising that a consistently higher
valuation is placed by property investors
on our estate than is valued within the
delivering shareholder value
since our foundation in 2003 
the board has had an absolute
commitment to the creation and
delivery of value to shareholders
whether through organic growth
investment in the business for 
high returns the pursuit of value
creative acquisitions or a return 
to shareholders by way of dividends
and share buybacks
roger carr chairman
the old bull  bush
premium country dining
hampstead london 
roger carr
chairman 5
mitchells  butlers
annual review and summary 
financial statement 2007
current integrated model the board has
been investigating options for capturing
the value of the property estate for
shareholders on a sustainable basis 
to that end after a competitive process
substantial progress was made in the
summer on negotiating a joint venture
transaction with r20 the investment
vehicle of robert tchenguiz in the 
final stage of this transaction we entered
into hedging agreements which were a
fundamental bank requirement to secure
the necessary financing arrangements 
for the joint venture and to achieve
appropriate ratings from ratings
agencies however the sudden and
unprecedented collapse of world debt
markets rendered the joint venture
undeliverable but left the hedging
arrangements in place driven by a most
unusual mix of inflation and interest 
rate expectations combined with limited
liquidity the cost of the hedges at the
year end although not a cash item had
risen to £155m after tax the hedging
arrangements have been retained as the
board remains committed to a property
based refinancing which would utilise
them once debt markets have recovered
the board will continue to balance the
assessment of risk with potential reward 
of this policy
whilst the board’s focus has been on the
establishment of a property joint venture
alternative property based refinancing
structures remain under consideration 
in this context the board has received 
a proposal from r20 in respect of a
demerged real estate investment trust
‘reit’ structure which includes r20
procuring a fixed price underwriting for
in the region of 25 of the reit equity
the attractiveness and feasibility of this
proposal is being explored a reit
structure would have to meet the board’s
requirement for an appropriate balance 
to optimise the value of both demerged
companies as independent entities
the board will continue to review
alternative structures that would
demonstrably create value from the
property whilst providing an attractive
longterm business model for the
operating company
in view of the focus on mitchells  butlers’
real estate we considered it was important
to establish a current value of our freehold
and long leasehold properties and we
requested colliers cre to update our
valuation as at 29 september 2007 the
revised value of the estate in our books 
at £5bn represents a net increase 
of £11bn compared to the historical
accounting basis and provides a solid and
up to date foundation for judging the asset
strength of the group in turbulent times
because pubs are specific use assets it 
is the operational success of the business
which has been the primary factor in
growing the value of our freehold property
and which has also enabled us to return
over £11bn in cash to shareholders 
since demerger in 2003 over and above
ordinary dividends this performance 
has been driven by our operational teams
who i believe are collectively the best in
the industry i would like to thank them 
all for their perseverance flexibility and
hard work during the year
there has been one change to the 
board announced during the second half
of the year tony hughes 59 stepped
down as managing director restaurants
on 1 october 2007 since when he has
been assisting in the handover of his role
and the further development of food
capabilities in the business he will retire
from the board of the company on 
31 december 2007 he is succeeded 
by adam fowle previously managing
director for the acquired sites and
business development adam has some 
20 years experience in licensed retailing
having joined mitchells  butlers in 1985
he was previously managing director 
of the pubs  bars division becoming 
a retail director at sainsbury’s for two
years he rejoined mitchells  butlers 
in 2005
i welcome adam to the board and 
would like to thank tony for his
exceptional contribution to the company
over the last 12 years his vision and 
drive have been instrumental in the
development of our highly successful 
pub restaurant brands i wish him every
happiness in his retirement
looking forward 2008 will undoubtedly
be a more challenging year with the
uncertain outlook for consumer confidence
and the first year of the smoking ban
however i am confident that a clear
management strategy for competitive 
outperformance based on high quality
brands excellent sites and strong
operating skills will underpin the
continuing progress of the company
reinvest margin
in qualityvalue
staff training 
scheduling 
incentives
capacity
management
of productivity
supply chain
efficiency
reduce
costs
increase
volume
increase
buying power
increase
value
value and volume cycle
the success of our value and
volume strategy means that we
can reinvest gross margin and
our labour productivity and
purchasing gains to provide
our customers with even better
quality and value 6
summary operating
and financial review
chief executive’s review
mitchells  butlers
annual review and summary 
financial statement 2007
continued market outperformance
our good results this year reflect our
leadership position in the growing
casual eatingout market and our
continued drinks market share
gains our average weekly sales per
managed pub are up 6 to £185k
well over three times that of the
average uk pub and we are
now serving a total of 107 million
meals a year
tim clarke chief executive
strategic review
mitchells  butlers has delivered another
strong trading performance this year
likeforlike sales have grown 3 driven
by our continued focus on value service
range and amenity operating profit
growth of 11 to £343m before
exceptional items has been generated by
our efficient conversion of sales increases
into profits growth through further
improvements in employee productivity
purchasing gains and effective cost
controls earnings per share for the year
before exceptional items are up 212 
at 355p this is a result of the trading
performance together with the
contribution from the former whitbread
pub restaurants the ‘acquired sites’ 
a significant development project
completed by standard commercial
property developments limited ‘scpd’
and the share consolidation that
accompanied the special dividend 
in the early part of the year
this strong performance has been
delivered against a background of
increasingly challenging market conditions
in the second half of the year a softening
in consumer confidence particularly
pronounced in the midmarket driven by
consecutive rises in interest rates growing
inflation pressures and an increased tax
burden was exacerbated by the volatility
in the global financial markets in
addition industry growth was limited by a
summer of prolonged poor weather
travellers rest
sizzling pub co
caversham reading 
tim clarke
chief executive 7
mitchells  butlers
annual review and summary 
financial statement 2007
these conditions have resulted in a
market where we have seen the increasing
importance of food soft drinks and 
wine against the decline in beer and
machine income
however in the long term the market for
value for money eating and drinking out
continues to grow our same outlet like
forlike food volumes increased by 6 in
the year against a pub food market up 3
driven by key social changes such as the
increase in the number of women in work
the number of single households and the
growth of an affluent retired population
since 1990 the proportion of adults
visiting pubs at least monthly has risen
from 59 to 72 there has been a
marked increase in the growth of less
frequent customers since the turn of the
century who attracted by the widening
appeal of pubs and the strengthened 
food offers are increasingly visiting to eat
the same period saw a decline in people
visiting the pub solely to drink with 
those visiting at least three times a week
dropping by more than half to 8 of 
the adult population
these longterm trends are likely to be
reinforced by the smoking ban as new and
lapsed customers previously discouraged
by tobacco smoke become regular pub
goers our experience so far suggests that
large pubs with the capability to serve
high volumes of good food at attractive
prices will benefit from a ban on smoking
mitchells  butlers is wellplaced 
to capture this longterm growth 
our successful strategy of offering our
customers an everwider choice of good
value food and drink in a high quality
welcoming environment has enabled us 
to achieve good sales growth for a fourth
consecutive year and positions us well to
make further market share gains in a more
difficult market during the year ahead
our emphasis on innovation to develop
our brands and formats and our offers 
to keep pace with fastchanging consumer
expectations and our relentless drive 
to improve our scale efficiencies combine
to ensure our customers enjoy the greatest
possible choice quality and value 
our employees recruited for their talent
and personality are trained and motivated
to deliver excellent customer service 
in essence our proven operational
expertise at every level combined with 
a pub estate of exceptional quality in
prime locations continues to deliver on
our strategy of driving profitable volume
growth and creating shareholder value
the strength of these strategic levers can
be seen in the results we have achieved 
in the conversion programme on the sites
acquired last year from whitbread of
which 172 have been completed so far
despite the substantial impact of the 
poor summer weather particularly on
destination pub restaurants sales have
increased by approximately 20 and we
are confident of achieving the 30 sales
uplift targets in fy 2009 as indicated 
at the time of acquisition
thus we believe we have a longterm
sustainable growth model which will
enable us to continue to gain market 
share despite the more uncertain outlook
for next year
market 
well positioned to capture the ongoing
growth in eatingout as well as to
continue to take drinks market share
strategic process
our strategic decisions are made at board level to focus operational 
effort in the primary growth areas of the market to maximise short 
and longterm value for our shareholders
outputs
financial 
driving both eps and dividend growth
and to invest for high returns
people
successfully recruiting training and
retaining the right people with the
right personalities
driving food volume growth through improving 
the quality and value offered to our customers
improving the quality and range of draught beers
sold and their price relative to competitors
strong sales and profits growth despite £8m of regulatory
and £14m of closure and preopening costs 
investment plans for all acquired sites prior to acquisition
speedy programme to be completed ahead of schedule
comprehensive inhouse training ensures that every
year thousands of retail managers and employees
complete the required professional qualifications to
pursue their careers with us
51 same outlet food sales growth
22 same outlet drinks sales growth
212 eps growth
20 incremental roi
70 internal succession rate 
to role of assistant manager
area example initiatives
 preexceptionals
 on expansionary capital in the core estate over the last two years creating pubs people want to visit
people come to our pubs to have a great time 
they also find good quality food and drink a vibrant
friendly atmosphere and a high quality décor the prince regent
metro professionals
central london 10
sizzling pub co
key to the success of our strategy to 
date has been our focus on leveraging
the growth in food to attract customers
to our pubs thereby increasing higher
margin ancillary drinks sales to
maximise profitability we also aim 
to reinforce the link between food and
drink through our marketing activity
and sales promotions
sizzling pub co ‘spc’ was established
in 2001 with only a few pubs initially
trading under the format but this year 
it celebrated its 200th opening sited in
suburban locations spc pubs offer their
local communities quality and value for
money food and drinks in comfortable
surroundings alongside friendly service
fundamental to the market out
performance of spc is the format’s
ability to attract an increasing number 
of customers into its pubs through 
its great value food offer to make
incremental fullprice drinks sales 
to these customers thus its current
offer of two main meals for £6 from
230pm to 600pm monday to friday 
has seen the number of meals sold 
in this timeslot grow to 16000 per 
week over the last two years the 
value food offer combined with other
promotional activities such as weekly
quiz nights music and sports events 
is also successful in driving repeat 
visits by guests
travellers rest
sizzling pub co
caversham reading
our experts
tessa 
brand manager
community pubs 
marketing team
tara 
category procurement
manager
drinks purchasing team
kevin 
menu development manager
food development team
keeping pace with change
we constantly evolve our brands
to suit changing consumer needs
this year we have refreshed our
o’neill’s brand with a new wider
menu and a targeted investment
programme average weekly food
sales have increased this year by
over 20 across 68 sites
25
our own label wine has grown 
significantly and now represents 
around 25 of overall wine sales 11
mitchells  butlers
annual review and summary 
financial statement 2007
the eatingout market now accounting
for approximately a third of the total
household expenditure on food in the 
uk has grown steadily for many years
however it is only now at levels achieved
in the us over thirty years ago the pub
with its informal relaxed atmosphere and
variety of value for money casual dining
offers is well placed to capture an even
greater proportion of the growth in this
market which has been accelerated by 
the smoking ban now in place for all uk
pubs and restaurants
for over a decade mitchells  butlers 
has focused on developing a range of
offers to meet consumers’ tastes building
on consumer insight techniques to invest
strategically to evolve these offers to add
incremental value to the sites we own as
well as those we acquire we believe we
have the leading portfolio of brands and
formats in the industry
we have successfully widened the 
appeal of the pub to capture new areas 
of growth in eatingout at both the higher
and lower scales of consumer affluence 
but continuous innovation within our
offers is critical in order to keep pace 
with the constantly rising expectations 
of customers as to food quality the range
of drinks on offer and the standards 
of amenity and service our continuous
investment in each of these areas is also
vital in widening the gap between our
amenity product range and value for
money and that of the competition
further improving our overall customer
value proposition and our market share
gains relative to the rest of the ontrade
in total this year we invested £253m
maintaining and upgrading our pubs
focus on menu development has enabled
us to offer guests more variety from
sharing ‘small plate’ dishes in ember inns
or handcut maris piper chips in our
metro professionals format cornerstone
our successful community pub format has
introduced its best of british range which
includes choices such as liver and onions
or ham hock in a west country scrumpy
sauce we have developed fresh dishes
that are healthier and tastier with a wider
taste profile and better provenance – for
example organically farmed shetland
salmon features on the new vintage inns
menu vegetarian options are also now
available across all our pubs
the improved quality choice and value 
of our food offers has broadened our
customer base attracting women families
and older guests as well as new pub
visitors a widening customer base
attracted by the food we offer has enabled
us to boost associated sales of higher
margin drink sales innovation in the
range of drinks we offer has been key 
to this success and we have seen our 
same outlet likeforlike drinks sales grow
by 22 for the year our contractual
freedom to source an increasing number
of products from a variety of producers
has allowed us to extend the choice for
our customers across all drinks categories
including new premium products and our
own label products offering great value
we have focused on enhancing serve
quality for example through our glycol
cooling system which improves the serve
consistency for the dispense of draught
products both beer and wine our own
label wine has grown to around 25 
of wine sales and we have draught wine
dispense in some 630 pubs draught 
wine sales now account for almost 10 
of total wine sales
targeted marketing campaigns and point
of sale material together with seasonal
promotions have communicated our new
dishes and new drink ranges effectively to
our customers very popular annual cask
ale festivals run across our nicholson’s 
and ember inns businesses while all 
bar one is holding a ‘favourites festival’
showcasing a unique range of beers 
and ciders from around the world and
providing recommendations to customers
on combining these beers with the
international tapas sharing plates available
in soft drinks we have extended the range
of fresh fruit juices cordials and mineral
waters the improved choice for customers
in these categories within our pubs  bars
division successfully drove sales growth of
16 from june to the year end despite the
poor summer weather
we have installed branded coffee offers
such as costa illy and segafredo in almost
1200 pubs which is proving popular 
with our customers – coffee sales volumes
have increased by 23 in the year the
introduction of branded coffee has worked
particularly well where we have also taken
advantage of the change in licensing law
and the smoking ban to broaden the
reason for and time of visit to the pub 
for example we have opened for
breakfast in a number of city centre
businesses such as selected browns and
nicholson’s sites which have seen
encouraging results so far
overall drinks volume growth has
experienced a slow down with the on
trade beer market down 5 and the 
soft drinks and wine market down 2
however the strong growth in our food
volumes and our drinks retailing skills
have enabled us to make substantial
market share gains in each of these
categories
the extension of the quality of our drinks
offers into nontraditional lines will also
add further to the attraction of our pubs
to new and light users
summary operating 
and financial review 
continued
the old contemptibles
classic pub
birmingham
23
coffee sales volumes up by 23
22
likeforlike drinks sales up by 22
40
across the company we now stock 
over 40 draught lagers compared 
to only five draught lagers in our pubs 
10 years ago value and volume
the success of our value and volume strategy means
that we can reinvest gross margin and our labour
productivity and purchasing gains to provide our
customers with even better quality and value o’neill’s
euston road
london 14
summary operating 
and financial review 
continued
mitchells  butlers
annual review and summary 
financial statement 2007
for more than a decade mitchells 
butlers has undertaken a strategic
repositioning of its estate to exploit the
growth areas of the market through key
acquisitions of significant pub estates 
as well as individual sites with large sales
our businesses are now spread across great
britain at the same time there has been a
move away from the historic concentration
of pubs in the industrial areas of the north
and the midlands to achieve a higher
weighting in the more affluent and faster
growing areas of the country as a result
75 of our pubs are now situated
primarily in residential areas
through this determined repositioning
we have developed a pub estate of
exceptional quality that is predominantly
freehold or long leasehold and which with
its superior scale and location generates
sales per pub over three times higher than
that of the average pub in the uk large
scale at both the corporate and individual
pub level has been critical in the success
of our value and volume strategy the 
size and capacity of our large pubs enable
us to drive high volumes of food at
attractive prices and this year our same
outlet likeforlike food sales increased 
by 51 we now sell 107 million meals 
a year making us the largest ontrade
caterer in the country
key to this growth is our commitment 
to provide our customers with the best
quality food offers possible at consistently
great value this year we have maintained
an average main meal price of £560
against a uk average of between £8 and
£9 which combined with the high level
of service and amenity that our pubs offer
has proved compelling to our guests food
volumes have grown by 67 over the last
five years purchasing and productivity
gains this year mean we are converting
sales growth very effectively into profits
although food is relatively lower margin
sustained and profitable volume growth
has strengthened our negotiating position
with suppliers driving further purchasing
gains and enabling us not only to offset
increases in regulatory costs this year but
to maintain retail net operating margins
broadly in line with last year our strategy
is to reinvest such gains back into the
value and quality offered to customers
driving real competitive advantage and
thereby creating additional impetus to
volume growth we will continue to
reinvest margin into our menu offers
at the pub level increasing volume
underpins our gains in business
efficiencies continuous investment in
developing operating skills in the capacity
management of kitchens bars and serve
times ensure high standards of service
even at peak trading times this year the
sizzling pub co training team was highly
commended in the customer service
training team of the year category in the
national customer service awards 2007
for its role in supporting new openings
our sophisticated scheduling and sales
forecasting systems allow us to match ever
more tightly the number of staff deployed
with the fluctuating trading patterns of 
the pub thus at busy periods we can
move quickly to capture additional sales
by scheduling more staff whilst keeping 
costs to a minimum during quieter times
this focus together with our training
programmes has resulted in a 39
increase in staff contribution per hour 
in the core estate pub employment costs
have been maintained at under 24 of
sales despite the substantial real increases
in the national minimum wage
our considerable purchasing power and
successful productivity systems have also
driven great benefit in the acquired sites
where ahead of our forecasts at the time
of acquisition we have made £7m of
purchasing gains during the year
 source menurama
67
food volumes up by 67 
over last five years
51
likeforlike food sales 
up by 51
39
we have achieved a 39 
increase in staff contribution 
per hour in the core estate
the coal hole
nicholson’s
central london
the oakmere
harvester
potters bar 15
pub  carvery
as the rise in frequent casual eating
out among valuefocused consumers 
has continued apace mitchells  butlers
has successfully evolved new formats 
to tap into this fastgrowing area of 
the market one such format is pub 
 carvery trialled over two years ago
and now trading in 58 sites nationally
serving over 2900 meals a week
the highest we believe of any format 
in the industry the brand provides a
traditional relaxed pub environment
with a freshlycooked carvery offer
priced from an incredible £350 for our
guests this represents better value than
eating at home the brand has average
weekly sales of almost £30k per pub 
and is providing very high incremental 
returns on investment
107m
we now serve 107 million meals 
per year compared to fewer 
than 15 million in 1995
our experts
food growth
in a pub eatingout market that
has grown by 27 since 2002
and is forecast to grow by a
similar amount in the next five
years our food volumes have
increased by 67 additionally
our food sales mix has grown
from 22 of total retail turnover
in 1998 to 37 at the end of
2006 this is anticipated to grow
to over 40 in two years’ time
when the full benefit of our
successful conversion of the
acquired sites will be evident
£560
average mitchells  butlers 
main meal price
the hole in the wall
pub  carvery
underwood nottingham 
nicky 
retail business manager
metro professionals team
steve 
senior purchasing manager
food purchasing team
michelle 
pricing manager
pricing and insight team people
our people are key to the successful profitable operation
of our businesses it is not enough to have the best pubs
brands and formats in the industry we need the best
people too we continually focus on recruiting training
and retaining the right people with the right personality
and a passion for excellent customer service the old contemptibles
classic pub
birmingham 18
cask ale training
the quality of our cellar skills has 
been instrumental in our sustained gains
in beer market share with the increase
in demand for cask ales ember inns has
invested this year in specific training on
the management and serve of cask ale
to ensure customers enjoy the finest
quality pint possible most ember inns
are now certified by cask marque 
an independent accreditation scheme 
to recognise excellence in the service 
of cask ale and each pub has a beer
quality champion trained by experienced
brewers it has been important to achieve
the right balance between the traditional
ale drinkers who are loyal to one or two
brands with those customers seeking 
out new flavours ember inns typically
carry at least one bigname brand 
or regional favourite but alongside 
there are a number of cask ales chosen
by the customers in conjunction with 
the manager
earlier this year ember inns worked
with the duchy originals charitable
brand to launch an exclusive promotion
of its organic ale which provided our
customers with an opportunity to try the
beer ahead of the competition
our experts
operational skills
our strong likeforlike sales
growth of 3 this year is a
direct result of the focus and
operational excellence of our
people the recruitment and
training of talented employees 
at all levels remains a vital
element of our continued 
market outperformance
duchy originals organic ale
the fieldhouse
ember inns solihull 
tim 
fire health  safety manager
risk  compliance team
donna 
food training manager
pubs  bars hr team
jenny 
employee communications manager
communications team 19
mitchells  butlers
annual review and summary 
financial statement 2007
key to the successful profitable operation
of our businesses is our ability to recruit
train and retain the best people our 
wide range of brands and formats means
we are able to offer a huge variety of
opportunities to our employees from 
bar staff to kitchen manager to chef 
we offer comprehensive training so we 
do not always require experience however
personality and a passion for excellent
customer service are critical
mitchells  butlers deploys a 
combination of assessment centres
internal development centres recruitment
advertising interviewing and onjob
evaluation to recruit potential managers
and assistant managers and to help people
develop their careers at the same time 
we recognise that many people want the
flexibility of a parttime job in order to
suit their lifestyle we aim to provide for
their needs in the workplace
we currently employ nearly 43000 people
and offer real opportunities to build a
career within the company from retail
staff to operations director this year we
invested an average of six days training
per employee with structured training
programmes including both on and off
the job training
at the retail level the national certificate
of personal licence holders ‘ncplh’ 
is an essential qualification to progress 
to manager level and employees can 
work towards this with an experienced
manager this year over 3000 employees
achieved their ncplh with the company
the internal succession rate to the post 
of retail manager is around 70 for most
of our brands and formats
our training programmes are not only
fundamental to motivating our employees
giving them the skills to achieve their
ambitions but also crucially they
underpin our commitment to operate 
our businesses safely notably we have
rigorous training about the responsible
retailing of alcohol to give our retail
employees the expertise and the
confidence to serve our customers
correctly our retail teams currently 
refuse service to approximately 50000
people a month who are unable to 
provide proof of their age
the company has two graduate
recruitment schemes the corporate
graduate programme and the vocational
graduate programme placing employees
on a fasttrack to a retail management
position within any given year we have
approximately 60 graduates participating
in our management training schemes and
for the second year running we achieved 
a springboard uk award for best student
placement for a large organisation 
the company has had an established
comprehensive employee communications
programme in place for over ten years 
a variety of channels such as team
meetings conferences inhouse
publications and the intranet keep staff
informed on matters relating to the
company and its performance twoway
communications between senior
management and employees are driven
primarily through regular discussions
groups at the corporate level and
operational communications forums 
a formal business forum at which
executive directors meet with elected
employee representatives to discuss
business concerns takes place annually
the yearly corporate employee
satisfaction survey gauges staff opinion 
on a wide variety of company issues 
and working practices in a confidential
manner and provides a continuous
objective measure for employee
satisfaction and engagement this year
the response rate to the survey improved
for the fourth consecutive year and the
continuing positive trend relating to
questions about employee engagement is
encouraging with over 90 of employees
feeling satisfied and motivated by their
work more than 94 of mitchells 
butlers’ employees would recommend 
the company as a good place to work
summary operating 
and financial review 
continued
500
around 500 managers a year 
complete their competence in 
retail management certificate
which has been accredited as
outstanding by the british institute
of innkeeping
2000
around 2000 retail employees 
a year complete their management
foundation course
3000
over 3000 employees a year 
complete their ncplh
toby cavery
thanet kent 
the scotsbridge mill
premium country dining
rickmansworth increasing property values
the combination of our effective operating strategy 
and our marketleading brands and formats gives us the
ability to trade each one of our pubs under the style most
appropriate for the target market and local customer
demographic increasing individual pub cash flows and
maximising asset values the scotsbridge mill
premium country dining
rickmansworth  22
summary operating 
and financial review 
continued
mitchells  butlers
annual review and summary 
financial statement 2007
the deliberate repositioning of mitchells
 butlers’ estate over the last 15 years has
been dramatic as we have sought to target
the growth areas of both the market and
the economy three strategic acquisitions
in 1995 harvester in 1999 the allied
domecq pubs and last year 239 pub
restaurants from whitbread have enabled
us to make significant step changes in the
restructuring of our business to seize
advantage in the fastgrowing market for
eatingout in this country we have also
acquired over 400 individual sites since
the early 1990s and the superior scale and
location of our pub estate is a source of
real competitive advantage
during the same period of time we 
have evolved a range of over 25 brands
and formats providing our customers 
– whether they are 18 or 80 – with a pub
bar or pub restaurant that they want to
visit our wide range of formats gives 
us the flexibility to trade each one of 
our properties under the offer most
appropriate for the target market and
local customer demographic affording 
us distinct competitive advantage this
flexibility has been a key element in our
successful conversion of the acquired
sites in addition we opened six new 
sites and completed 65 conversions and
13 growth projects from our existing estate
to change the customer offer or increase
the trading area of the site we are
generating a pretax incremental return 
of 20 on such investments in the core
estate over the last two years
we have also continued to make targeted
disposals this year taking advantage of 
the buoyancy in the market to crystallise
the property value of some smaller
freehold pubs where this exceeds the
trading value to the company during 
the year we achieved £162m of disposal
proceeds including the sale of 102 pubs
to trust inns ltd in october 2006
generating funds which can then be
reinvested in higher growth assets
our integrated model where the value 
of our property portfolio has been greatly
enhanced by our superior operational
expertise and marketleading brands and
formats has already created significant
value for shareholders and underpinned
our success to date this has been
reflected in the £11bn upward revaluation
of the estate to £50bn which has been
carried out in conjunction with our
property valuers colliers cre
our focus remains on releasing to
shareholders the benefits of this capital
appreciation in october 2006 we
returned £486m to shareholders by 
means of a special dividend of £1 per
share crystallising for shareholders 
the continuing growth in the value 
of the estate
it has also been clear that property
investors are attracted to the long term
secure growth prospects that can be
created through the rentalising of part of
our operational cash flows in a dedicated
property structure whether in a joint
venture a reit or another separate
property structure fundamentally higher
values appear to be placed on the estate
than when it is combined in an integrated
model with the operations
we believe that substantial value can 
be potentially captured from our high
quality freehold and long leasehold 
assets through such structures a key
consideration in such a process is to
construct a lease arrangement which
ensures that both the property and the
operations remain mutually incentivised 
to continue to create longterm value
the board will continue to investigate
actively options for capturing the value 
of the property estate for shareholders 
on a sustainable basis
20
we are generating a pretax incremental
return of 20 on our investments in the
core estate over the last two years
the crown  greyhound
metro professionals
dulwich london
the oakmere
harvester
potters bar 
three strategic acquisitions 
to reposition the estate
1995 harvester
1999 550 former 
allied domecq pubs
2006 239 former whitbread 
pub restaurants 23
the acquired sites
in july last year we acquired 239 of 
the best pub restaurant sites in the uk
these freehold pubs were well located
large predominantly residential and
freehold or long leasehold and
approximately half situated in the
higher growth regions of the south east
and south west of england they were
therefore an excellent strategic fit with
the company’s existing estate our key
capital investment priority this year has
been the rapid and successful conversion
of these sites and a total of £80m has
been invested to this end
the conversion of these sites to our
brands and formats is enabling us to
create substantial shareholder value from
this acquisition and is accelerating our
growth and leadership position in the
casual eatingout market
our experts
format evolution
we have developed and 
evolved over 25 leading brands
and formats affording us
distinct competitive advantage
over operators with a more
limited range
£1  1bn
the increase in the value of our estate 
following a revaluation this year
the royal saracen’s head
premium country dining
beaconsfield 
mark 
senior estates manager
property estates team
clair 
investment performance manager
strategic planning team
andrew 
brand building manager
toby carvery 
building management team 24
summary operating
and financial review
corporate social responsibility
mitchells  butlers
annual review and summary 
financial statement 2007
mitchells  butlers has a core belief that
sustainable business success has to be
based on experienced professional
licensed retailing which builds upon the
reputation of each individual pub in its
own community
we operate in a highly regulated industry
and recognise that attached to the grant of
our licences is the primary obligation to
ensure the responsible operation of our
premises at all times for customers staff
and the wider community for this reason
we strive to ensure that corporate social
responsibility underpins our business
operation and discipline at every level
our philosophy for corporate social
responsibility combines the best of 
the traditions of the pub landlord’s
commitment to the community with
leading practice in crucial areas such 
as the responsible retailing of alcohol
food safety and staff training
a more detailed account of mitchells 
butlers’ corporate social responsibility
practices can be found in our separately
published corporate social responsibility
review 2007 on wwwmbplccomcsrreview
alcohol and social responsibility 
‘asr policy’
mitchells  butlers first established a
comprehensive policy for the responsible
retailing of alcohol in 2000 our asr
policy includes clear guidelines on the
responsible operation of our pubs the 
sale and promotion of alcohol our under
18s policy and our comprehensive staff
training and development programmes 
we updated and relaunched the asr
policy in october 2004 again in may 2006
and most recently in august this year to
include tighter guidelines on the pricing
and promotions across our businesses and
on challenge 21 our under 18s policy
we are determined to ensure that
mitchells  butlers’ pubs are operated 
in a way that fully justifies the grant 
of a licence for the responsible retailing 
of alcohol in that regard we were pleased
to be recognised for the second time 
by the morning advertiser as this year’s
most responsible drinks retailer in the
managed pubs sector
smoking bans
we believe the introduction of the smoking
bans will be beneficial to our businesses 
in the longer term they present us with a
real opportunity to attract new customers
who did not previously use pubs because
of the tobacco smoke to come into 
our pubs and pub restaurants across 
the united kingdom
our experience since the bans came into
force shows that our large pubs serving
high volumes of good food at attractive
prices are already seeing this benefit 
we are continuing to develop the
reputation of our pubs for serving good
food at good value prices focusing on
innovation in the development of our
menus and drinks ranges to create a wide
choice of dishes using quality ingredients
which are freshly prepared
gaming
mitchells  butlers through its support 
of the british beer and pub association
‘bbpa’ has worked closely with the
gambling commission on the drafting 
of the gaming machine permits code 
of practice which replaced the industry’s
voluntary code from 1 september 2007
the bbpa has also worked with the
gambling commission on the draft code
of practice for gaming in pubs and clubs
which will regulate the playing of poker
and bingo
community involvement
mitchells  butlers understands that each
of our businesses has an impact on its
local community we aim to ensure that
this impact is always positive and we
pursue this through a carefully composed
blend of local and national initiatives 
our pub and pub restaurant managers
raise thousands of pounds for charity 
and are supported via the company
community awards and celebrated via the
annual heart of the community awards 
in recognition of the positive community
impact achieved by our pub managers 
in addition we are now in our third 
year of partnership with barnardo’s 
our inhouse routes to a brighter future
campaign helps barnardo’s to work with
the most vulnerable children and young
people helping them transform their lives
and their potential 
as a leading company with its
headquarters in birmingham we also
sponsor a number of successful arts
organisations in the city partnerships
include the city of birmingham
symphony orchestra birmingham 
royal ballet the birmingham rep 
and excathedra
environment
mitchells  butlers takes its 
environmental responsibilities seriously
and has a policy of seeking continuous
improvement with particular focus 
on recycling and energy usage
we have an established recycling
programme for both glass and cardboard
in our businesses in the last 12 months
we recycled over 14000 tonnes of waste
we are continuing to make excellent
progress in energy saving and in
september we opened our first ‘green’
business designed to trial a number 
of energy saving measures at the toby
carvery banbury
the friary
scream
derby 25
mitchells  butlers
annual review and summary 
financial statement 2007
integrity of the existing and proven
integrated operating model following a
competitive process we negotiated terms
with r20 for the sale of a 50 stake in a
£45bn joint venture comprising the
majority of our freehold and long
leasehold properties shortly before
finalising the agreement the sudden debt
market crisis in july meant that the
transaction could not be implemented
hedging arrangements
in the final stage of the planned
transaction mitchells  butlers and r20
separately entered into debt hedging
arrangements comprising interest rate and
inflation swaps intended to be contributed
to the joint venture these were required
to support the delivery of the financing
package the turbulence in the debt
markets since july has led to longterm
interest rates falling at the same time
longterm inflation expectations have
risen whilst the market liquidity for such
instruments has sharply diminished
these three factors combined to produce
a posttax deficit on the hedges of £155m
against the marktomarket values at the
balance sheet date this was not a cash
loss to the business as the hedges have
not been closed out and we continue to
expect that they will be utilised in a future
property based refinancing once debts
markets have stabilised
property valuation
given the continued focus on our estate
we completed a revaluation of the
properties as at 29 september 2007 the
revised value of £50bn is included in our
financial statements and represents a net
increase of £11bn against the historical
accounting approach whilst this
accounting valuation is consistent with 
the existing structure of the group our
property valuers have advised that within
an opcopropco structure our freehold
and long leasehold properties would
support a market rent of £280m and a
rental yield of 58 with an indicative
value of £48bn before any allowance for
purchaser’s costs this valuation covers
only the rent from these properties and
therefore excludes the other cash flows
received by the operating company 
which based on trading in the year ended 
29 september 2007 would equate to 
some £200m of underlying ebitda
pensions
after £40m of additional contributions
there was a pension deficit of £18m at 
the end of september under ias19 with
more prudent mortality assumptions
applied following the actuarial valuation
exercise in the year the formal actuarial
valuation as at 31 march 2007 indicates a
larger deficit of around £250m reflecting
the more conservative gilts basis for
discounting future liabilities in line 
with the new pension regulations the
company is finalising with the trustees 
a formal recovery plan to close this deficit
by 2017 as part of this plan in addition
to ordinary annual service contributions
we expect that further contributions of
£24m will be made in each of the next
three years
summary
our operational focus remains on driving
profitable sales growth and generating
strong cash flows we will also continue 
to look at the best opportunity to release
additional value from our property to
benefit shareholders
summary operating
and financial review
finance director’s report
mitchells  butlers has performed
well despite a more challenging
consumer environment in the
second half of the year earnings
per share grew by 212 in the
year underpinning the proposed
increase of 163 in the annual
ordinary dividend to 1425 pence
per share in addition to the
special dividend of £1 per share
paid to shareholders in 
october 2006
strong operating performance
our value and volume strategy combined
with the unrivalled quality of our pub
properties has been the key to our
resilient trading performance likefor
like sales during the year were up 3 
and net retail operating margins were
broadly maintained despite £8m of
additional regulatory costs and £14m 
of closure and preopening costs arising
from the conversion of the acquired 
sites to our brands and formats
investing for high returns
in the year we invested £253m in the
estate including £131m of expansionary
capital of which £80m was spent on
converting the acquired sites delivering 
a sales uplift of approximately 20 against
the levels at which the sites were acquired
our core expansionary investment over
the last two years has continued to deliver
incremental pretax returns of 20 whilst
the business as a whole achieved a posttax
cash return on capital employed of 108
value creative disposals
alternative use and investment 
demand for individual pubs reached
record levels during the year and we took
the opportunity to dispose of some of 
our smaller pubs reinvesting the proceeds
in high return projects within the estate
during the year we raised £162m of cash
from disposals including £101m from 
the sale of 102 smaller community pubs 
to trust inns ltd
releasing additional value from property
we conducted during the year a rigorous
review to determine whether the
company’s properties would be valued
more highly if they were separated from
the operations of the business our
markettesting in the spring confirmed
that specialist investors would place 
a substantially higher value on our
properties than that which was implied in
our stock market valuation we examined
alternative structures to access this upside
for shareholders and concluded that a
joint venture would offer the best route 
to crystallise a substantial proportion of
the property value whilst protecting the
karim naffah
finance director 26
summary operating
and financial review
mitchells  butlers
annual review and summary 
financial statement 2007
t otal revenue for the year was £1894m up
101 on last year including the first year
of ownership of the acquired sites strong
likeforlike sales growth continued
reflecting resilient trading in more
challenging conditions in the second half
and further significant market share gains
with the success of our ongoing sales and
marketing activities likeforlike food and
drink sales were up 51 and 22
respectively with average retail prices up
less than 2 overall gross margins were
slightly below last year reflecting a further
significant shift towards the higher growth
but lower margin categories of food and
wine by continuing to improve employee
productivity our pub employment ratio was
maintained at below 24 of sales despite
further increases in the national minimum
wage adding £7m to our labour costs as a
result the net retail operating margin at
179 was broadly in line with last year
despite £14m of oneoff closure and
preopening costs
we invested £261m in the estate in the year
of which £8m related to the purchase of the
acquired sites and £80m was invested to
convert the majority of those sites to
mitchells  butlers’ brands and formats
£122m was invested to maintain the high
levels of amenity in the pubs and in the
continuing development and evolution of
our brands and formats and £51m was
spent on expansionary projects in the
existing estate during the year six new
pubs opened and 65 existing pubs were
converted to one of our brands and formats
to uplift their sales and profits overall we
are continuing to achieve an incremental
pretax return of 20 on the expansionary
investment of the last two years net capital
investment was £99m after achieving
£162m of cash from disposals
operating profit before exceptional items
was £343m 110 ahead of last year
revenue in the pubs  bars division was
10 ahead of last year including £16m
from the acquired sites transferred to the
division following conversion likeforlike
sales on a same outlet basis were ahead by
47 there were continued drinks market
share gains as a result of the widening gap
between our amenity product range and
value for money and that of the
competition food sales across the division
were up 125 excluding the acquired
sites driven by growth in the residential
pubs as well as the t own pubs and central
london estate as a result of tight cost
control and improved employee
productivity operating profit of £191m
before exceptional items was up 67 
in the year and net operating margin
increased from 187 to 197 excluding
the contribution from the acquired sites
and the impact of major disposals in 
the comparative the existing pubs and bars
estate increased operating profit by 119
revenue in the restaurants division was
192 ahead of last year at £908m
including the contribution of £160m
from the acquired sites excluding the
acquired sites revenue grew by 27 with
food sales up 39 and drinks up 07
the restaurants division successfully
integrated the acquired sites and
completed the majority of the conversions
during the year as planned growth in the
rest of the estate slowed during the year
primarily as a result of the increasing
economic pressure on midmarket
consumers and greater intensity of
competition in pub food operating profit
of £145m before exceptional items was up
115 on last year including £16m from
the acquired sites net operating margin
fell from 171 last year to 160 due to
the closure and preopening costs associated
with the conversion of acquired sites
and the comparatively low margins
achieved by those sites prior to conversion
excluding the acquired sites operating
profit increased by 40 with a net
operating margin improvement on
02 percentage points
standard commercial property
developments limited the group’s
inhouse property development business
generated £18m of revenue and £7m of
operating profit in the year
substantial progress was made in the
summer on structuring an attractive
property transaction with terms largely
concluded with r20 the investment vehicle
of robert tchenguiz based on the sale of
a 50 stake in a £45bn property joint
venture comprising 1300 pubs and
£240m of rent in the final stages of the
planned transaction the company and
r20 separately entered into certain interest
and inflation hedging arrangements
intended to be contributed to the joint
venture the sudden rapid deterioration
in debt market conditions in later july
meant that a financing package could not
be obtained and the transaction could not
be executed the hedges remain in place
as it is the board’s intention to utilise
these instruments in a future property
based refinancing once debt markets
have stabilised
given the continued focus on the value of
our estate we have completed a revaluation
of our fixed assets based on an updated
valuation performed by colliers cre of
our freehold and long leasehold properties
as at 29 september 2007 the revised value
of the properties at £50bn represents a
net increase of £11bn compared with the
historical accounting basis we will continue
to regularly revalue our properties each year
on a rolling basis
the company entered into certain interest
rate and other hedging arrangements in
july 2007 which provide an economic
hedge against the future anticipated cash
flows associated with a property based
refinancing however they do not qualify for
hedge accounting the total fair value of
these instruments during the year reported
within exceptional items was £221m an
exceptional loss on property related items of
£23m arose during the year consisting of
impairment arising from the revaluation of
the property portfolio of £45m partly offset
by net profits on the disposal of properties
of £22m primarily related to the sale of
102 pubs to trust inns limited on
6 october 2006 exceptional costs of £4m
were incurred in the first half of the year
relating to the integration of the acquired
sites whilst a further £7m of costs were
incurred in the second half of the year
relating primarily to professional advisers’
fees in relation to the board’s review
of a potential property refinancing and the
proposed joint venture transaction with r20
finance costs for the year before exceptional
items were £153m £35m higher than last
year reflecting the higher level of debt in
the group following the purchase of the
acquired sites in july 2006 and the
payment of a special dividend of £486m
to shareholders in october 2006 the
effective tax rate was 30 one percentage
point lower than last year
earnings per share before exceptional items
were 355p 212 ahead of last year in
addition to the growth in operating profit
earnings per share have benefited from a
17 reduction in the average number of
shares mainly as a result of the 34 for 41
share consolidation in october 2006
the board is recommending a final
dividend of 10p per share t ogether with
the interim dividend of 425p paid in june
this gives a total dividend for the year of
1425p 163 higher than last year
the group’s operations continued to
generate strong cash flows cash flow from
operations was £447m before exceptional
items but after pension contributions of
£40m net capital expenditure was £99m
including £80m of expenditure on the
acquired sites £51m of core expansionary
capital investment £122m of maintenance
capital less disposals proceeds of £162m
on an ias 19 basis the net deficit in the
pension scheme was £18m £14m after tax
at 29 september 2007 compared with £99m
£67m after tax at 30 september 2006 the
reduction in deficit reflects the benefit of
£40m of additional pension contributions
paid in the year and improved investment
returns partially offset by updated
assumptions of life expectancy 27
mitchells  butlers
annual review and summary 
financial statement 2007
2007 2006
52 weeks 52 weeks
income statement £m £m
revenue 1894 1720 
operating profit
pubs  bars 191 179 
restaurants 145 130 
retail 336 309 
scpd 7 –
operating profit before exceptional items 343 309 
operating exceptional items 11 7
lossprofit arising on propertyrelated items 23 23 
operating profit 309 325 
net finance costs 368 113
net finance income from pensions 11 8 
lossprofit before taxation 48 220 
t ax creditexpense 38 25
lossprofit for the financial period 10 195 
earningsloss per ordinary share
basic – before exceptional items 355 p 293p
basic – after exceptional items 25p 397p
ordinary dividends per share 1425p 1225p
special dividends per share 10000p –
2007 2006
cash flow £m £m
operating profit before exceptional items 343 309 
depreciation and amortisation 129 121 
ebitda before exceptional items 472 430 
working capital movement 8 9 
other noncash items 11 11 
additional pension contributions 40 20
net cash inflow from operations before exceptional items 451 430 
net capital expenditure 99 583
operating cash flow after net capital expenditure 352 153
integration costs paid 4 –
cash flow from operations after net capital expenditure 348 153
net interest paid 145 107
t ax paid 33 48
dividends paid 538 56
purchase of own shares 46 76
proceeds on release of own shares held 11 12 
defence costs – 4
expenditure associated with refinancing 4 10
corporate restructuring costs 4 –
net cash flow 411 442
2007 2006
restated
balance sheet £m £m
noncurrent assets 5163 3970 
noncurrent assets held for sale 6 88 
t otal noncurrent assets 5169 4058 
current assets 303 498 
t otal current liabilities 790 321
net current liabilitiesassets 487 177 
t otal assets less current liabilities 4682 4235 
t otal noncurrent liabilities 3106 3026
net assetsshareholders’ funds 1576 1209 
 restated in respect of a prior year deferred tax adjustment see notes to the 2007 annual report 
and accounts
independent auditors’ statement to the
members of mitchells  butlers plc
we have examined the group’s summary
financial statement for the year ended 29
september 2007 which comprise the
summary income statement summary
consolidated cash flow statement and
summary balance sheet
this report is made solely to the
company’s members as a body in
accordance with section 251 of the
companies act 1985 to the fullest extent
required by the law we do not accept or
assume responsibility to anyone other than
the company and the company’s members
as a body for the audit work for this
report or for the opinions we have
formed
respective responsibilities of directors
and auditors
the directors are responsible for
preparing the annual review in
accordance with applicable law
our responsibility is to report to you our
opinion on the consistency of the summary
financial statement within the annual
review with the full annual financial
statements the directors’ report and
directors’ remuneration report and its
compliance with the relevant requirements
of section 251 of the companies act 1985
and the regulations made thereunder we
also read the other information contained
in the annual review and consider the
implications for our report if we become
aware of any apparent misstatements or
material inconsistencies with the summary
financial statement
basis of opinion
we conducted our examination in
accordance with bulletin 19996 ‘the
auditors’ statement on the summary
financial statement issued by the auditing
practices board our report on the
company’s full annual financial statements
describes the basis of our audit opinions
on those financial statements and the
directors’ remuneration report
opinion
in our opinion the summary financial
statement is consistent with the full annual
financial statements the directors’ report
and directors’ remuneration report of
mitchells  butlers plc for the year ended
29 september 2007 and complies with the
applicable requirements of section 251 of
the companies act 1985 and regulations
made thereunder
ernst  young llp
registered auditors
london 28
board of directors
mitchells  butlers
annual review and summary 
financial statement 2007
1 roger carr aged 60
chairman 
became chairman of the company on
its separation from six continents plc
in 2003 he is chairman of centrica plc
and deputy chairman of cadbury
schweppes plc and a senior adviser to
kohlberg kravis roberts co ltd he is
also a nonexecutive director to the
bank of england’s court of directors
he has previously held a number of
senior appointments including chief
executive of williams plc chairman 
of chubb plc and chairman of thames
water plc he was appointed as a
member of the remuneration committee
on 1 october 2006
2 tim clarke aged 50
chief executive †
became chief executive of the
company on its separation from 
six continents plc in 2003 having
previously been chief executive of
six continents plc between 1995 and
2000 he was chief executive of bass
retail which now constitutes the
business of mitchells  butlers plc 
he chairs the executive committee 
he is a director of the british beer 
pub association having been chairman
in 2002 and was appointed a director 
of the drinkaware trust on 2 february
2007 he is a nonexecutive director of
associated british foods plc and the
birmingham royal ballet
3 karim naffah aged 44
finance director †
became finance director of the
company on its separation from six
continents plc in 2003 in 1991 he
joined bass becoming its director of
strategic planning in 1992 in 2000 
he became strategy director for that
group and a member of the strategic
business committee and the executive
committees of the hotels and retail
divisions he also held responsibility 
for the property development and it
functions
4 mike bramley aged 56
managing director pubs and bars †
became a director of the company on
its demerger from six continents plc 
in 2003 he has been managing director
pubs  bars since september 2002 in
over 20 years with basssix continents
he worked in a variety of roles in the
pubs and brewing businesses in 1995
he became commercial director of
bass taverns and in 1998 was
appointed hr and commercial director
of bass leisure retail he is a director
of the british beer  pub association
5 tony hughes aged 59
executive director † 
former managing director restaurants
became a director of the company on
its demerger from six continents plc 
in 2003 he was managing director
restaurants from 2000 to 30 september
2007 in 1995 he joined bass following
senior management roles at bq ja
devenish and whitbread in 2001 he
received the hotel and caterer ‘catey’
for the pub industry award in both
2002 and 2006 he was voted retailers’
retailer individual of the year by the
pub and restaurant industry and in 
2007 he received a lifetime achievement
award at the 8th european foodservice
summit
6 adam fowle aged 48
managing director restaurants†
became managing director restaurants
on 1 october 2007 adam rejoined
mitchells  butlers in march 2005 as
business development director having
spent two years with sainsbury’s as
retail director adam originally joined
bass as a district manager in 1985 and
worked in a number of operational and
strategic roles latterly as managing
director for the pubs and bars division 
7 george fairweather aged 50
nonexecutive director •
appointed a nonexecutive director 
in april 2003 he chairs the audit
committee he is group finance
director of alliance boots having
previously held the same role with
alliance unichem up until its merger
with boots group earlier appointments
were with elementis and dawson
international both as group finance
director and before that with dixons
group and procter  gamble
8 sara weller aged 46
nonexecutive director •
appointed a nonexecutive director in
april 2003 she chairs the remuneration
committee sara is managing director
of argos ltd having previously 
been deputy managing director of 
j sainsbury plc earlier appointments
were with abbey national and mars
confectionery
9 sir tim lankester aged 65
nonexecutive director •
appointed a nonexecutive director in
may 2003 he is president of corpus
christi college oxford from 1973 to
1995 he was a member of the civil
service rising to be deputy secretary 
of hm treasury permanent secretary
overseas development administration
foreign and commonwealth office and
permanent secretary department for
education he served as private
secretary at 10 downing street and
represented the uk on the boards of
the world bank and the imf  he has
held nonexecutive directorships of
cucgu and smith  nephew and
currently is a nonexecutive director 
of actis capital he is chairman of 
the board of management of the
london school of hygiene and tropical
medicine and was appointed chairman
of the board of trustees of the
contemporary dance trust limited 
on 1 september 2007
10 drummond hall aged 58
nonexecutive director •
appointed senior independent director
on 1 february 2007 having recently
stepped down from his full time position
as chief executive of dairy crest plc
prior to that he had held marketing
positions in procter  gamble mars
and pepsi cola before moving to hp
bulmer plc where he became managing
director of the cider and beer division
and a member of the group executive
he was appointed a nonexecutive
director of taylor nelson sofres plc on
12 april 2007
our strong 
leadership team
159
2610
37
48 29
mitchells  butlers
annual review and summary 
financial statement 2007
executive committee
11 john butterfield aged 42
strategy director†
joined the bass group in 1999
transferring to the retail business in
2000 to become director of strategic
planning he was previously employed
by bain  company management
consulting and standard
charteredwest lb investment
banking
12 bronagh kennedy aged 44
hr director and general counsel†
company secretary to the board 
of directors bronagh is a qualified
solicitor and joined the bass retail
business in april 1995 she was
appointed director of legal affairs 
in 2000 and hr director and general
counsel in 2002 she was previously
employed with allen  overy
13 adam martin aged 44
marketing director†
joined the bass group in 1996
becoming marketing director of the
retail business in 1999 adam was
previously employed at gemini
consulting and cadbury limited
14 richard pratt aged 52
commercial director†
became commercial director in 2002
having joined the bass retail business 
in 1994 as catering retail director he
previously worked for diageo plc
15 jeremy townsend aged 43
deputy finance director†
joined the company in june 2005
as deputy finance director he was
previously employed by j sainsbury plc
corporate finance director and
ernst  young corporate finance
16 alison wheaton aged 43
property and it director†
joined the bass retail business in 
1997 as director of strategic planning
moving to run hollywood bowl before
becoming operations director of
london  venues she was appointed
property  it director in 2002 alison
was previously employed by pepsi cola
lever brothers and morgan stanley and
is a nonexecutive director of the london
development agency 
key
 a nonexecutive director
 a member of the remuneration
committee
• a member of the audit and
remuneration committees
 a member of the nomination
committee
† a member of the executive
committee
11 15
12 16
13
14 30
directors’ report 
corporate governance report
mitchells  butlers
annual review and summary 
financial statement 2007
directors’ report
principal activities
mitchells  butlers is the leading operator
of managed pubs and pub restaurants
with an estate of 2003 sites as at 
29 september 2007 principally located 
in the uk a review of the the group’s
performance is contained in the full
directors’ report which crossrefers to the
chairman’s statement and the operating
and financial review incorporating the
chief executive’s review the business
review the financial review and corporate
governance report contained in the annual
report and financial statements 2007 
a copy of which is available on request 
and can be viewed on the company’s
website at wwwmbplccomreports
share capital
on 1 october 2006 the company 
had 486910806 ordinary shares of 7
1
⁄ 12p
in issue on 18 october 2006 the share
capital of the company was consolidated
in the ratio of 34 new ordinary shares 
of 8
13
⁄ 24p for every 41 existing ordinary
shares of 7
1
⁄ 12p as at 29 september 2007
403779693 ordinary shares of 8
13
⁄ 24p were
in issue 1241969 of these shares were
held in treasury and the company’s
employee share trusts held 1070449
shares at the year end
refinancing and return 
of funds to shareholders
following a refinancing that was
completed in september 2006 and the
share capital consolidation that occurred
in october 2006 the company paid 
a special dividend of £1 per share on 
25 october 2006 as an interim dividend 
for the year ending 29 september 2007
final dividend
the board recommends a final dividend
for the year ended 29 september 2007 
of 100p per share to be paid on 
4 february 2008 to shareholders 
on the register at close of business on 
7 december 2007 this makes a total
dividend including the special dividend
for the year of 11425p per share 
2006 1225p per share 
securities and exchange 
commission ‘sec’ registration 
as a result of changes to the sec rules
implemented in june 2007 the company
was able to file to terminate its registration
under the us securities and exchange 
act 1934 the ‘exchange act’ this
termination took effect on 4 september
2007 and accordingly the company no
longer has any reporting requirements
under the exchange act
directors
details of the directors who served on 
the board during the year are shown
on page 28
there were no changes to the board
during the year
adam fowle was appointed to the board
on 1 october 2007 and tony hughes 
will stand down from the board on 
31 december 2007 mike bramley roger
carr and drummond hall will retire by
rotation at the annual general meeting
on 31 january 2008 adam fowle will also
stand for reappointment at that meeting as
he was appointed by the directors during
the year the executive directors each
have a service contract with the company
and the nonexecutive directors serve
under letters of appointment
employees
the group employed an average of
42741 people in 2007 2006 38677
details of the group’s employment
policies are shown in the annual report
and financial statements
donations 
the company continues to support
community initiatives and charitable
causes full details of which are given 
in the annual report and financial
statements 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 2008 agm 
to make limited donations or incur
limited political expenditure although
it has no intention of using the authority
annual general meeting
the notice convening the annual general
meeting to be held at 1100am on
thursday 31 january 2008 is contained 
in a circular sent to shareholders with 
this review
corporate governance report
the board recognises the importance 
of good corporate governance in creating 
a successful sustainable and profitable
business it is committed to compliance
with the principles of corporate
governance as set out in the combined
code on corporate governance 
the ‘combined code’ and considers that
the company has complied throughout
the year ended 29 september 2007 with
all the provisions of the combined code
except where explained below
internal control
the board is responsible for the 
group’s system of internal control and 
risk management and for reviewing its
effectiveness in order to discharge that
responsibility the board confirms that it
has established the procedures necessary
to apply the combined code including
clear operating procedures lines of
responsibility and delegated authority
these procedures have been in place since
the company was listed and are regularly
reviewed by the board
during the year the board has conducted
a review of the effectiveness of the system
of internal control the system is designed
to manage rather than eliminate the risk
of failure to achieve business objectives
and it must be recognised that it can only
provide reasonable and not absolute
assurance against material misstatement
or loss in that context the review in the
opinion of the board did not indicate that
the system was ineffective or unsatisfactory
the group regularly reviews both the type
and amount of external insurance that it
buys bearing in mind the availability of
such cover its cost and the likelihood and
magnitude of the risks involved the
group additionally maintains directors’
and officers’ insurance cover
board and committee structure
to support the principles of good
corporate governance the board is
responsible to the shareholders for the
good standing of the company there
were eight regular board meetings during
the year along with seven additional
meetings during the year the company
entered the ftse 100 and as a result 
the chairman now holds more than one
chairmanship of a ftse 100 company
the nonexecutive directors specifically
considered this as part of the board
effectiveness review and concluded that 
he is more than capable of devoting
sufficient time to his role of chairman 
of the company alongside his external
appointments
the audit remuneration nomination
and executive committees of the 
board meet throughout the year 
their terms of reference are available 
on wwwmbplccominvestors
the company secretary’s responsibilities
include ensuring good information flows
to the board and its committees and
between senior management and non
executive directors and for assisting 
the directors with their professional
development
going concern
the company’s financial statements 
for the year ended 29 september 2007
have been prepared on a going concern
basis as after making appropriate
enquiries the directors have a reasonable
expectation that the group has adequate
resources to continue in operational
existence for the foreseeable future 31
these principles of alignment are cascaded as appropriate to executives below board level
incentivises increase in cash returns generated 
by the business and reduction in overall cost 
of funding
aligns interests of executive directors and
shareholders
up to 177 of base salary total shareholder
return against an
industry specific
comparator group
average excess of
cash return on cash
capital employed over
the weighted average
cost of capital
total shareholder
return against an
industry specific
comparator group
average excess of
cash return on cash
capital employed over
the weighted average
cost of capital
reflects competitive market level for the role and
individual contribution
benchmarked against ftse all share index and
relevant subsector comparator group
individual contribution individual contribution
remuneration report
mitchells  butlers
annual review and summary 
financial statement 2007
this summary is an extract of information
from the full remuneration report
contained in the annual report and
financial statements 2007 a copy of 
which is available on request and can 
be viewed on the company’s website at
wwwmbplccomreports throughout this
review references to the year are to the
52 week period ended 29 september
2007 the full remuneration report will
be put to shareholders for approval at the
forthcoming annual general meeting 
remuneration policy for executive
directors
the following overall policy has applied
throughout the year and is intended 
to continue to apply for the financial 
year 2008
the remuneration committee the
‘committee’ determines on behalf of the
board with the benefit of advice from
external consultants and the human
resources function the remuneration
packages including pension rights and
should it be necessary compensation
payments of the executive directors 
the other members of the executive
committee and certain other senior
executives the committee is also
responsible for reviewing the fees of the
chairman the committee aims to ensure
that remuneration packages are designed
to attract retain and motivate executive
directors of the highest calibre it has
regard to the levels of remuneration
within the group and the specific
industries and businesses with which the
group companies compete and is also
sensitive to levels within the wider
community the company operates
performancerelated policies designed to
provide the appropriate balance between
fixed remuneration and variable risk
reward using target or projected value
calculations performancerelated
incentives for executive directors will
equate to approximately 60 of total
remuneration
share and cashbased incentives are
designed so as to align the interests of
executives with those of shareholders
executive directors are currently required
to build and maintain significant
shareholdings equivalent to twice their
basic salary but three times salary for the
chief executive although the committee
recently reduced this to one times salary
for any future appointments subject to
this continuing to be reflective of market
practice it was decided that adam fowle
who was appointed to the board on 
1 october 2007 would be required to
attain a shareholding of twice his annual
salary within five years of his appointment
as an executive director
the company measures its performance
against its strategy through four key
performance indicators ‘kpi’s being
1 same outlet likeforlike sales growth
2 earnings per share ‘eps’ growth
3 cash return on cash capital employed
‘crocce’ in excess of the weighted
average cost of capital post tax
‘wacc’
4 incremental return on expansionary
capital
as outlined in the ofr total shareholder
return ‘tsr’ is also an important
measure of performance and this measure
forms one of the performance conditions
for the performance restricted share plan
these kpis and their alignment to
remuneration policy are summarised
below
performance restricted share plan ‘prsp’
basic salary
incentivises growth in eps and share price
aligns interests of executive directors and
shareholders
deferred shares matched 11 subject to
achievement of a performance condition dividend
accrued shares will be awarded on the value of
ordinary dividends accruing on vested shares
growth in eps over
rpi over a three year
performance period
short term deferred incentive plan ‘stdip’
growth in eps over
rpi over a three year
performance period
motivates achievement of annual business kpis
and delivery of eps target
55 of salary ‘on target’ bonus 100 of base
salary maximum bonus payable in cash or shares
at the discretion of the committee
earnings per share
75 and personal
and group business
objectives 25
these objectives are
based on a number 
of measures including
likeforlike sales
growth and return 
on investment
earnings per share
75 and personal
and group business
objectives 25
these objectives are
based on a number of
measures including
likeforlike sales
growth and return on
investment
annual performance bonus
purpose grant policy performance measures
200607 200708 mitchells  butlers
annual review and summary 
financial statement 2007
components of remuneration packages
basic salary
basic salary will normally be set within 
a competitive range broadly at median
market level when compared with an
appropriate comparator group as
previously reported from 2007 onwards
the committee decided that by exception
basic salary may extend into the upper
quartile to attract new employees and
reward key individuals for consistent
outstanding performance 
of the components of the remuneration
package only basic salary is pensionable
annual performance bonus and short
term deferred incentive plan
challenging performance goals are set
which must be achieved before a bonus
becomes payable these targets are linked
to the group’s performance in achieving
strategic business objectives delivering
corporate financial targets and to each
director’s achievement of personal
business objectives the maximum bonus
opportunity for 2007 was 100 of salary
annual bonuses may be paid in cash but
at the discretion of the committee the
executive directors may receive all or 
part of the bonus in the company’s shares
under the terms of the stdip  under 
the stdip  any award of bonus shares 
is deferred for three years and if the
executive director is in the company’s
directors’ emoluments 2007
total emoluments
basic annual excluding pensions
salaries performance 2007 2006
and fees bonus benefits 52 weeks 52 weeks
£000 £000 £000 £000 £000
executive directors
tim clarke 538 – 22 560 951
mike bramley 374 – 21 395 643
t ony hughes 374 – 25 399 645
karim naffah 386 – 13 399 677
nonexecutive directors
roger carr 224 – – 224 209
george fairweather 55 – – 55 51
drummond hall  47 – – 47 44
sir tim lankester 47 – – 47 44
sara weller 55 – – 55 51
t otal 2007 2100 – 81 2181
t otal 2006 2015 1222 78 3315
 final consideration of whether a bonus should be payable in respect of the year to 29 september 2007 has been frozen pending a review by the committee
 drummond hall’s fees were paid to his former employer dairy crest group plc until his retirement from that company on 31 december 2006
the figures above represent emoluments earned during the periods shown there was no payment for loss of office ‘benefits’
incorporate the value of all tax assessable benefits arising from employment with the company which primarily relate to the
provision of a company car and healthcare cover
employment at the end of that period 
the company will provide matching
shares on a 11 basis subject to
satisfaction of the performance condition
where matching shares have been
awarded the performance condition has
been based on eps growth dividend
accrued shares equal to the gross
ordinary dividends applicable over the
performance period will be awarded based
on the number of shares vesting
during the year certain hedging
instruments ‘hedges’ were taken out in
anticipation of implementing a property
backed refinancing these hedges have
given rise to a noncash deficit at the year
end as it is uncertain whether this non
cash deficit will crystallise and if so the
extent to which it will affect the financial
performance of the company the
executive directors have voluntarily
offered to freeze final consideration of
whether a bonus should be paid in respect
of the year to 29 september 2007 pending
a review by the remuneration committee
at the forthcoming half year or later if
appropriate
performance restricted share plan
the prsp aims to encourage continuing
improvement in the group’s performance
over the longer term generally a three
year performance cycle will commence
each year and at the end of the cycle two
aspects of the company’s performance will
be measured
• total shareholder return against a
comparator group of competitor
companies and
• cash return on cash capital employed
against its weighted average cost of
capital post tax
awards will be graded according to the
level of performance on each of these
measures for awards made from 2006
onwards dividend accrued shares 
equal to the gross ordinary dividends
applicable over the performance period
will be awarded based on the number 
of shares vesting
executive share options 
grants of options have been made under
the mitchells  butlers executive share
option plan ‘exsop’ although no
grants have been made under the exsop
since june 2005 it is intended that no
further grants are made under this plan
the maximum value of shares over which
options were granted in any year was twice
salary for executive directors options are
exercisable three to ten years from grant
subject to the achievement of a
performance condition set by the
committee 
pension arrangements
executive directors participate with 
other members in the relevant group
pension schemes
32 33
remuneration report
continued
mitchells  butlers
annual review and summary 
financial statement 2007
short term deferred incentive plan 
the values earned in the year in respect of shares receivable through the matching facility under the stdip are shown in the table
below these matching shares relate to bonuses earned for 200506 which were rolled over under the terms of the plan and are
valued at 7215p per share the share price on 5 december 2006 the date of award matching shares will be released after three
years subject to the satisfaction of a performance condition
awarded in fy 2007
value of matching 
number of matching shares awarded
director shares awarded £000
tim clarke 44187 319
mike bramley 19455 140
t ony hughes 38910 281
karim naffah 21121 152 
performance restricted share plan
a cycle of the prsp ended on 29 september 2007 the performance measures related to the company’s tsr performance against 
a group of comparator companies and to the excess of crocce over wacc the maximum potential awards to executive directors
are shown in the table below
maximum maximum maximum
potential potential potential
shares shares as award
as at lapsed exercised granted as at as at earliest latest
300906 in year in year in year 290907 290907 vesting lapse
director shares shares shares shares shares £000 date date
tim clarke 586978 61337 143117 140014 522538 3193 301107 301111
mike bramley 393220 40290 94008 95104 354026 2163 301107 301111
t ony hughes 393220 40290 94008 95104 354026 2163 301107 301111
karim naffah 417784 43296 101024 100388 373852 2284 301107 301111
 granted on 1 december 2006 share price at date of grant was 6850p
 based on the share price on 28 september 2007 of 6110p
executive share options
the directors executive share options at 29 september 2007 are summarised in the table below
weighted 
average
option price
director 300906 exercised 290907 pence
tim clarke 1671917 456620 1215297 28052
mike bramley 1085781 605777 480004 28541
t ony hughes 1169473 689469 480004 28541
karim naffah 1022934 32567 990367 25971
the above table excludes potential awards under the prsp
allemployee share plans
executive directors are entitled to participate in the company’s allemployee plans on the same basis as other employees 
no grant of options was made under the sharesave plan to any director during the year the directors’ interests under the 
sharesave plan at 29 september 2007 were as follows
shares option
under price
director option pence
tim clarke 9423 169
mike bramley ––
t ony hughes ––
karim naffah 4509 209 mitchells  butlers
annual review and summary 
financial statement 2007
under the share incentive plan executive directors and employees are conditionally awarded shares which become unconditional
after three years the executive directors’ interests in shares under this plan are as follows
shares
conditionally total
unconditional awarded in conditional
director shares june 2007 shares
tim clarke 1669 342 1574
mike bramley 1440 278 1463
t ony hughes 1493 278 1463
karim naffah 1606 292 1524
directors’ shareholdings
ordinary shares of
8
13
⁄ 24p
290907 300906
executive directors
tim clarke 806409 487022
mike bramley 422666 104222
t ony hughes 468381 110932
karim naffah 333131 224827
nonexecutive directors
roger carr 27470 17470
george fairweather 1658 1658
drummond hall 7974 2902
sir tim lankester 1017 1017
sara weller 4383 4354
 adjusted for the share consolidation implemented on 18 october 2006
the above shareholdings and the shares held on behalf of the executive directors by the trustee of the company’s share incentive
plan are all beneficial interests
pension benefits
the company provides an executive pension plan the ‘plan’ and an unfunded executive topup scheme in which the directors
participate their accrued pensions under these schemes which would be paid annually on retirement at 60 based on service to 
29 september 2007 are shown in the table below mike bramley opted out of the plan for future accrual with effect from 5 april
2006 and tony hughes opted out of the plan for future accrual from 31 march 2007
accrued
years of pension at
pensionable 290907
director service £ pa
tim clarke 17 295800
mike bramley 27 256300 
t ony hughes† 12 140800 
karim naffah 16 173700
† the value of accrued pension for the year to 290907 reflects in part the decision taken at the discretion of the committee after careful consideration and with 
the consent of the plan trustees to allow tony hughes to draw his accrued pension without deduction on his early retirement aged 59 from 31 december 2007 
no specific additional contribution is or has been made by the company in respect of his early retirement
company’s performance against ftse 100 and ftse 250 150403 to 290907
from its listing on 15 april 2003 until 21 december 2003 the company was a constituent of the ftse 100 index and thereafter was included in the ftse 250 index 
on 20 april 2007 the company reentered the ftse 100 index the graph above therefore measures the company’s performance against both indices
0
100
200
300
400
sep 07 sep 06 sep 05 sep 04 sep 03
mitchells  butlers tsr
ftse 250 
ftse 100 
34 35
shareholder information
mitchells  butlers
annual review and summary 
financial statement 2007
electronic communication
shareholders can register to receive 
an email notification of the availability 
of the company’s latest shareholder
communications at the following web 
link wwwmbplccomecomms the website
also enables shareholders to view details 
of their own shareholding or electronically
appoint a proxy to vote on their behalf 
on any poll that may be held at the
forthcoming annual general meeting
following recent changes in legislation 
the company will be seeking authority 
to amend its articles of association at the
2008 agm to enable it to make electronic
communication with shareholders the
default position the company intends 
to enclose communication election cards
with the interim dividend payment
mailing in 2008 shareholders will have
the right to request to receive paper
communications however this presents 
an opportunity for the company to
benefit from reducing costs whilst
reducing its impact on the environment
interim results
the company does not intend to publish
future interim results in hard copy the
interim results will be available online 
at wwwmbplccomreports
amalgamating your share accounts
if you received more than one copy of this
report it may be because the registrar has
more than one record of shareholdings in
your name to ensure that you do not
receive duplicate mailings in future you
can have all your shares amalgamated into
one account by contacting the registrar at
the address below
dividend mandates
shareholders who wish dividends to be
paid directly into a bankbuilding society
account should contact the registrar for 
a dividend mandate form this method 
of payment removes the risk of delay or
loss of dividend cheques in the post and
ensures that your account is credited 
on the due date
key dates 
2007 preliminary results announcement 29 november 2007
final dividend
exdividend date 5 december 2007
record date 7 december 2007
payment date 4 february 2008
annual general meeting 31 january 2008
interim management statement 31 january 2008
announcement of interim results may 2008
interim dividend payment date july 2008
interim management statement july 2008
pre close trading update september 2008
announcement of 2008 preliminary results novdec 2008
dividend reinvestment plan ‘drip’
shareholders can choose to reinvest
dividends received to purchase further
shares in the company through a drip  
a drip application form is available from
the registrar or at the following web link
wwwmbplccomdividends
low cost share dealing service
a simple low cost postal facility for 
buying and selling mitchells  butlers plc
ordinary shares is available through the
company’s registrar information may be
obtained from the registrar’s address
below or at wwwshareviewcoukdealing
individual savings accounts ‘isas’
isas in mitchells  butlers plc ordinary
shares are available through the registrar
and information may be obtained from
the registrar’s address below
share price information
the latest mitchells  butlers plc share
price is available at the following web 
link wwwmbplccomshareprice in the
financial press or on ceefax and teletext
and also on the financial times cityline
service telephone 44 0906 843 0000
calls charged at 60p per minute
sharegift
the orr mackintosh foundation 
operates this charity share donation
scheme for shareholders with small
holdings of shares whose value makes
them uneconomic to sell details can 
be obtained from the registrar or the
sharegift website wwwsharegiftorg or by
calling sharegift on 44 020 7930 3737
corporate social responsibility review
the mitchells  butlers corporate social
responsibility review 2007 is available 
on the company’s website and can be
downloaded directly by visiting
wwwmbplccomcsrreview if you do 
not have access to the internet and would
like a printed copy please write to the
communications department at the
registered office shown below
special dividend and share consolidation
on 25 october 2006 the company paid 
a special dividend of £1 per share to
shareholders on the register at the close of
business on 17 october 2006 as approved
by shareholders on 17 october 2006 the
special dividend was accompanied by 
a consolidation of the company’s share
capital effective from 18 october 2006
whereby shareholders received 34 new
ordinary shares for every 41 existing
ordinary shares held on 17 october 2006
contacts
registered office
27 fleet street
birmingham b3 1jp
telephone 44 0870 609 3000
fax 44 0121 233 2246
registrar
equiniti
aspect house
spencer road
lancing
west sussex
bn99 6da
telephone 0870 241 3930 from the uk
telephone 44 01903 702424 
for nonuk callers
fax 44 01903 702424
 for those with hearing loss a textphone
is available on 0870 600 3950 for uk
callers with compatible equipment
stockbrokers
jpmorgan cazenove limited
merrill lynch international
auditor
ernst  young llp
investment bankers
citigroup
solicitors
allen  overy llp 36
mitchells  butlers
annual review and summary 
financial statement 2007
acquired sites
239 pub restaurant sites acquired from
whitbread plc in july 2006
amenity
design décor furniture and facilities
that contribute to the environment and
atmosphere of a pub 
awt average weekly take
the average sales per pub per week
calculated as total sales divided by the
average number of pubs trading during
the period divided by the number of
weeks in the period 
brands
outlets which trade under a common
name or their own individual names
under an externally recognised group
name with a consistent design drinks
range menu service style and
promotional programme
business franchise
an agreement where an entrepreneur
gains access to high quality pubs 
and a sophisticated business support
infrastructure whilst the company 
retains its scale purchasing and overhead
advantages and shares in the trading
upside through a franchise fee the
company receives a commercial rent for
the property and retains the property
ownership
capacity management
the process that seeks to ensure that 
a pub can service maximum volumes at
peak trading times whilst maintaining
customer satisfaction levels
cash flow from operations
the cash generated from the operations
of the company generally defined as
revenues less all operating expenses
cagr
compound annual growth rate
covers
the number of main meals sold
cover turn
the total number of main meals sold
divided by the number of main meals
that could be sold in one sitting
ebitda
earnings before interest tax
depreciation amortisation and
exceptional items
external costs
costs influenced by outside factors 
ie regulatory and energy costs
formats
outlets where to the customer’s eye 
the business trades without any overt
branding or badging but the customer
offer and operating template are
managed to defined standards
gross margin
gross profit divided by sales expressed
as a percentage
gross profit
sales less cost of goods sold expressed 
in monetary terms £s
incremental pretax returns
growth in annual pretax operating
profit expressed as a percentage of the
associated capital investment for sites
which do not have 12 months post
investment trading incremental return 
is estimated based on an annualisation 
of actual postinvestment trading
ifrs
international financial reporting
standards
national minimum wage
the minimum amount an employer
must pay its workers as defined by law
offtrade
any retail outlet which has a licence to
sell alcohol for consumption off the
premises
ontrade
any retail outlet which has a licence 
to sell alcohol for consumption on 
the premises eg pubs restaurants
nightclubs clubs
operating profit
earnings before interest tax and
exceptional items
outlet employment ratio
pub employment costs divided by total
sales expressed as a percentage
posttax cash return
ebitda less tax divided by average net
operating assets less revaluation reserve
plus accumulated depreciation plus
goodwill written off
productivity
sales less hourly paid wages divided by
the number of hours worked
refinancing
the repayment of an existing loan with
the proceeds from a new loan
reit
real estate investment trust
same outlet likeforlike sales growth
the increase in sales performance of all
managed pubs that were trading for the 
two periods being compared expressed 
as a percentage
securitisation
a means of raising finance secured on
identifiable and predictable cash flows
derived from a particular set of assets
share buyback
the purchase in the open market by 
a listed company of its own shares
uninvested likeforlike sales growth
the increase in sales performance 
of those managed pubs that have not
received expansionary investment of
more than £30000 in either year being
compared expressed as a percentage
glossary 37
mitchells  butlers
annual review and summary 
financial statement 2007
mitchells  butlers key brands
and formats include
all bar one
stylish contemporary bars in 
cities nationwide run by professionals
for professionals
alex
vibrant barrestaurants in germany
where people of all ages meet up 
to eat drink and talk and enjoy the
extensive outside seating areas 
and full tableservice
nicholson’s
primarily located in london these
beautifully restored historic pubs offer
premium quality food and a wide
selection of cask ales
community pubs
great value inclusive pubs at the heart
of their neighbourhoods providing
regulars with a relaxed sociable place
to meet up with everyone they know
ember inns
high quality local pubs providing our
customers with a home from home and
a great range of cask ales wines and
quality food
o’neill’s
irish bars offering great ‘craic’ and live
music alongside hearty pub food with 
a distinct irish flavour and the best
guinness in town
premium country dining group
modern country restaurants with great
bars designed to offer our guests high
quality fresh food and drink in a
sophisticated environment 
scream
aimed at students and likeminded
individuals and famous for the scream
burger as well as their excellent lager
selection these pubs are often the best
place in town to watch all major
sporting events
metro professionals
highly individual pubs which 
attract an eclectic urban crowd and
offer an innovative choice of wines 
and cask beers and food with a
contemporary twist
browns
elegant brasserie bars and restaurants
offering a fusion of british and european
classic dishes in tasteful surroundings
toby carvery
welcoming accessible pub restaurants
with traditional carvery experts creating
sunday everyday for all our guests
whatever the occasion
vintage inns
traditional pub restaurants with real
character and cosy interiors providing 
a warm relaxed atmosphere excellent
wines caskconditioned ales and 
good food
the paper used in this review is
derived from 50 recycled material
the remaining 50 is sourced from
sustainable forests and bleached using
an elemental chlorine free process
it is produced at a mill that has iso
14001 environmental accreditation
and is fsc certified
music bars
playing the best music from the 70s
80s and 90s these high street venues
offer customers a terrific night of
dancing in a mixed friendly crowd
harvester
familyfriendly restaurants serving
freshly prepared grills spitroasts and
fish dishes and the famous salad cart
included with every meal
hollywood bowl
fun safe bowling for groups of friends
and families to enjoy on any day of the
week with the convenience of a real
time online booking service
town pubs
conveniently located city centre 
pubs offering good value food and
drink whether for a morning coffee
a lunchtime get together or an after
work drink with friends
sizzling pub co
friendly comfortable local pubs offering
regulars and families great value sizzling
dishes and a good choice of drinks
pub  carvery
top quality carvery meals at great
prices within a friendly local pub serving
good value drinks
innkeeper’s lodge
offering the quality satisfaction 
and value for money expected from
budget accommodation but with the
advantage of a great pub next door
innkeeper’s lodge is the perfect place
to stay for business or leisure
50
cert no ttcoc002228
design and production
carnegieorr
print
royle corporate print mitchells  butlers plc
27 fleet street
birmingham b3 1jp
tel 44 0 870 609 3000
fax 44 0 121 233 2246
wwwmbplccom


Summary:
 delivering 
shareholder value
since our foundation in
2003 the board has had
an absolute commitment
to the creation and
delivery of value to
shareholders whether
through organic growth
investment in the
business for high returns
the pursuit of value
creative acquisitions or 
a return to shareholders
by way of dividends 
and share buybacks
roger carr 
chairman
4
chairman’s statement
since our foundation in 2003 the 
board has had an absolute commitment 
to the creation and delivery of value to
shareholders whether through organic
growth investment in the business for
high returns the pursuit of value creative
acquisitions or a return to shareholders 
by way of dividends and share buybacks 
with this guiding principle in mind and
recognising that a consistently higher
valuation is placed by property investors
on our estate than is valued within the
current integrated model the board has
been investigating options for capturing
the value of the property estate for
shareholders on a sustainable basis 
to that end after a competitive process
substantial progress was made in the
summer on negotiating a joint venture
transaction with r20 the investment
vehicle of robert tchenguiz in the 
final stage of this transaction we entered
into hedging agreements which were a
fundamental bank requirement to secure
the necessary financing arrangements 
for the joint venture and to achieve
appropriate ratings from ratings agencies
however the sudden and unprecedented
collapse of world debt markets rendered
the joint venture undeliverable but 
left the hedging arrangements in place
driven by a most unusual mix of inflation
and interest rate expectations combined 
with limited liquidity the cost of the
mitchells  butlers’ results this year reflect
a strong financial performance and we are
pleased with the operational development
across the business the executive team
has been particularly effective in growing
sales and profits despite some significant
economic and cost challenges whilst also
rapidly implementing the conversion of
the high quality whitbread sites acquired
in july 2006 we have extended our
leadership of the eatingout market
serving 107 million meals and generated
significant drinks market share gains 
as a result revenues have risen by 10
operating profits by 11 and earnings per
share before exceptional items by 21
this performance has enabled the board
to recommend a final dividend payment
of 100p per share taking the total
ordinary dividend for the year to 1425p
an increase of 163 this payment is
additional to the special dividend of
£486m paid to shareholders in october
2006 and reflects the strong growth 
in earnings per share as well as our
commitment to a progressive policy 
for dividends
mitchells  butlers
annual report and accounts 2007
roger carr
chairman 5
hedges at the yearend although not 
a cash item had risen to £155m after tax
the hedging arrangements have been
retained as the board remains committed
to a propertybased refinancing which
would utilise them once debt markets
have recovered the board will continue
to balance the assessment of risk with
potential reward of this policy
whilst the board’s focus has been on the
establishment of a property joint venture
alternative property based refinancing
structures remain under consideration 
in this context the board has received 
a proposal from r20 in respect of a
demerged real estate investment trust
‘reit’ structure which includes r20
procuring a fixed price underwriting for
in the region of 25 of the reit equity
the attractiveness and feasibility of this
proposal is being explored a reit
structure would have to meet the board’s
requirement for an appropriate balance 
to optimise the value of both demerged
companies as independent entities
the board will continue to review
alternative structures that would
demonstrably create value from the
property whilst providing an attractive
long term business model for the
operating company
in view of the focus on mitchells 
butlers’ real estate we considered it was
important to establish a current value of
our freehold and long leasehold properties
and we requested colliers cre to update
our valuation as at 29 september 2007
the revised value of the estate in our
books at £5bn represents a net increase 
of £11bn compared to the historical
accounting basis and provides a solid 
and up to date foundation for judging 
the asset strength of the group 
in turbulent times
because pubs are specific use assets 
it is the operational success of the business
which has been the primary factor in
growing the value of our freehold property
and which has also enabled us to return
over £11bn in cash to shareholders 
since demerger in 2003 over and above
ordinary dividends this performance 
has been driven by our operational teams
who i believe are collectively the best in
the industry i would like to thank them 
all for their perseverance flexibility and
hard work during the year
there has been one change to the 
board announced during the second half
of the year tony hughes 59 stepped
down as managing director restaurants
on 1 october 2007 since when he has
been assisting in the handover of his role
and the further development of food
capabilities in the business he will retire
from the board of the company on 
31 december 2007 he is succeeded 
by adam fowle previously managing
director for the acquired sites and
business development adam has some 
20 years experience in licensed retailing
having joined mitchells  butlers in 1985
he was previously managing director 
of the pubs  bars division becoming 
a retail director at sainsbury’s for two
years he rejoined mitchells  butlers 
in 2005
i welcome adam to the board and would
like to thank tony for his exceptional
contribution to the company over the last
12 years his vision and drive have been
instrumental in the development of our
highly successful pub restaurant brands 
i wish him every happiness in his
retirement
looking forward 2008 will undoubtedly
be a more challenging year with the
uncertain outlook for consumer
confidence and the first year of the
smoking ban however i am confident
that a clear management strategy for
competitive outperformance based on
high quality brands excellent sites and
strong operating skills will underpin the
continuing progress of the company
mitchells  butlers
annual report and accounts 2007
overview operating 
and financial
review
reports accounts shareholder
information
revenue £m
ebitda £m
operating profit £m
earnings per share p
final dividend per share p
crocce 
financial trends
notes
ebitda operating profit and
profit before tax are all stated
before exceptional items 
2007
2006
2005  1631m
  1720m
  1894m 2007
2006
2005  289m
  309m
  343m 2007
2006
2005  755p
  860p
  1000p
2007
2006
2005  403m
  430m
  472m 2007
2006
2005  254p
  293p
  355p 2007
2006
2005  106
  110
  108