Mitchells & Butlers reports return to food volume growth: Mitchells & Butlers has reported like-for-like sales grew 1.1% in the 28 weeks to 12 April. Total sales rose 2.55 to £1,016m. Adjusted operating profit rose 2.1% to £147m. Agreement has been reached with its pension trustees with the deficit increased to £572m as of March, with company contributions increasing to £45m per annum from £40m. The company reported a turn-around in volume performance with food volume up 0.2% compared to a drop of 4.7% in the same period in 2013 and drink volume stabilising at 0.3% compared to a drop of 6% in the 2013. The company opened 11 new sites and converted four with capital expenditure of £86m compared to £59m in the comparable period the year before. Operating margin has stabilised at 14.5% and staff turnover stands at an historical low of 78%, with net promoter score growing strongly to 63%. Chief executive Alistair Darby said: “We are pleased with our trading performance in this first half, particularly the turnaround in volumes, alongside which we have made good progress against our key priorities, and continued to position Mitchells & Butlers for sustainable long-term future growth. Successful resolution of the recent triennial pensions valuation, which we are announcing today, provides greater visibility and certainty over future funding and cash flow, at an affordable level. Our business transformation is gaining momentum. Through our clearly laid-out strategy, we are well-placed to take advantage of the economic recovery across the UK.” The company reported further improvements in FSA Food Hygiene Ratings, from an already high base. The company added: “This is a measure which we know is of critical importance to our guests, and therefore we continue to drive performance in this area. Having started in June 2013, new pub systems are now installed and live in more than 750 pubs, with rollout to be completed during FY 2015. The introduction of handheld order pads and kitchen management systems have enabled us to speed up guest service, thus driving net promoter score. Investment in back of house systems reducing administration and freeing up time for the general manager and area manager to grow the business. We expect to deliver around 35 new site acquisitions and conversions this financial year.”

Young’s reports profit before tax up 24%: London pub operator Young’s has reported sales up 8.8% to £210.7m in the year to 31 March. Pre-tax profit jumped 24% to £26.1m. Managed pub revenue increased 9.6% to £199.0m, with same outlet like-for-like sales up 6.7% and managed house adjusted operating profit up 13.7%. There was continued growth in accommodation sales driven by both occupancy and room rates resulting in RevPAR of £52.02, up £2.76. Additional rooms set to open in first half of the current year will bring the total number of rooms to 443 (2013: 397). A record £19.8 million was invested in the existing estate; two new managed and three tenanted pubs acquired. Net debt reduced both in absolute terms and as a multiple of Ebitda to 2.45 times (2013 2.77 times) along with new banking facilities gives significant flexibility for further investment. There has been positive trading since the period end - managed house revenue in first seven weeks of current financial year up 8.5% in total, up 7.2% on like-for-like basis. Chief executive Stephen Goodyear said: “This was another excellent year, with strong revenue and profit growth, particularly when compared with last year which included the Olympics. Our focus on London and the south east is a real advantage, as is our very clear positioning at the premium end of the market. The improving economic picture is increasing customer confidence which we are seeing in both footfall and spending patterns, with customers trading up in both drink and food. Such is the strength of our cash flow that we have been able to invest £33.6 million during the year, whilst reducing our debt. As a result, there is today real depth and richness to our estate, and we remain ambitious to expand and broaden it further. Trading since the period end has been positive with managed house revenue in the first seven weeks of the new financial year up 8.5% in total and 7.2% on a like-for-like basis. The consistently high level of investment in our estate, combined with the hard work put in by our teams across the group, is clearly paying off. Coupled with the improving economic news flow, this gives us every reason to be confident that the current year will be another positive one for Young’s.”

   

Max Property – rents on Enterprise pubs risen 10% since acquisition: Max Property has reported that it is now receiving 10% more rent on the 29 freehold Enterprise pubs it acquired it 2011 for £44.4m. The company stated: “With a total floor area of 150,000 sq ft, situated in high value residential areas of London, (the pubs) were acquired in January 2011 for £44.4 million (£300 psf capital value). The pubs are located in Marylebone, Notting Hill, Chelsea, Clerkenwell, Spitalfields, Southwark, Camden, Highgate, Islington, Barnes, Sheen, Chiswick, Battersea, Clapham, Balham, Tooting and Fulham. At acquisition, the initial yield on the portfolio was 6.7%, which has subsequently risen to 7.4% on cost due to the annual increases in the rent roll. The independently assessed vacant possession value of the portfolio at the time of acquisition, subject to existing use as pubs, was approximately the same as the purchase price, and many of the properties are considered by the management team to have a higher alternative value for residential use in the event that they should fall vacant and planning consent for change of use secured. During the year, two pubs in Islington and Whitechapel were sold at a combined price of £5.3 million, representing an initial yield of 4.9% and a profit of 42% over cost. Including pubs sold in prior periods, total profits on sale to date amount to £3.1 million, which is 31% over cost, and following those sales, the average lot size is now £1.9 million at the most recent valuation. The pubs are let to Enterprise Inns Plc on 35 year full repairing and insuring leases commencing in January 2011 at market rents well covered by trading profits. Rents initially totalled £3.0 million per annum (£2.3 million for the portfolio still owned), with minimum 3% per annum and maximum 4% per annum RPI-linked uplifts occurring annually for the first five years and every five years thereafter. After the disposals mentioned above, the passing rent is now £2.5 million per annum, with rents having increased by just over 10% since acquisition.”