corporate social responsibility review 2004that corporate social responsibility underpins our...

Mitchells & Butlers 1 Annual Review 2004Mitchells & Butlers 1 Annual Review 2004

Corporate SocialResponsibility Review 2004

‘We have a core belief that sustainable business success has to be based on experienced, professional licensed retailing which builds the reputation and appeal of each individual pubin its catchment area.’

2Mitchells & Butlers plc Corporate Social Responsibility Review 2004

3 Foreword4 About this Review

Marketplace6 Our Guests6 Our Stance on Industry Issues

6 Alcohol & Social Responsibility7 Smoking7 Licensing Law Reform7 Healthy Eating

8 Safety and Security8 Health & Safety8 Food Safety9 Fire Safety9 Security

9 Disabled Customers9 Customer Complaint Policy

Employees12 Health & Safety

12 Health & Safety Policy12 Employee Security

12 Employee Policies12 Equal Opportunities and Diversity13 Work-Life Balance

13 Training13 Employee Consultation

14 Discussion Groups14 Business Forum14 Employee Satisfaction Survey

15 Counselling/Employee Support/Confidential Disclosure Hotline

Community17 Pub at the Heart of the Community18 National Activity19 Support in Birmingham19 Our Role as Neighbours

Environment22 Recycling22 Energy Consumption23 Emissions

Corporate Governance25 Code of Ethics25 Board Responsibilities26 Risk Management26 Suppliers

‘Our philosophyfor corporate social responsibilitycombines the bestof the traditions ofthe pub landlord’s commitment tothe community with leading practice in critical areas suchas the responsible retailing of alcohol,food safety andstaff training.’

Tim Clarke, Chief Executive

Mitchells & Butlers is the leadingoperator of managed pubs and pubrestaurants in the UK, employing37,000 people in some 2,000businesses. In a typical week wewelcome several million guests to ouroperations, and serve them 1.5 millionmeals and 10 million drinks. Yet suchscale belies the fact that each of ourpubs and pub restaurants seeks tosatisfy a market that is predominantlylocal. Most are a key part of their localcommunity, largely drawing their stafffrom the local area.

Mitchells & Butlers has been in thepub business for well over a century.Running throughout the company is a core belief that sustainablebusiness success has to be basedon experienced, professional licensedretailing which builds the reputationand appeal of each individual pub in its catchment area.

Whilst this positioning of our pubsat the heart of the community isan unchanging imperative, we alsoaim to ensure that our operations,marketing, training, procurement,systems and other managementdisciplines reflect the best of theadvances that have taken place inmodern licensed retailing.

We apply the same philosophy tocorporate social responsibility,combining the best of the traditions ofthe pub landlord's commitment to thecommunity with leading practice incritical areas such as the responsibleretailing of alcohol, food safety and stafftraining. This Review describes some of this work, from our Heart of the

Community Awards which encouragepub managers to compete for theopportunity to donate £10,000 to acharity of their choice, to our award asthe UK's Most Responsible On TradeRetailer of Alcohol, which recognisesthe implementation of our rigorousAlcohol & Social Responsibility Policy.

We operate in a highly regulatedindustry and recognise that attachedto the grant of our licences is theprimary obligation to ensure theresponsible operation of our premisesat all times for customers, staff andthe wider community. It is for thisreason, which goes to the core of ourbusiness, and under the responsibilityof the Board, that we strive to ensurethat corporate social responsibilityunderpins our business operation atevery level.

2004 is the first year for which we have published a Corporate SocialResponsibility Review. Whilst we areproud of our record, we recognise theneed for continuous improvement inour processes, targeting and reportingof corporate social responsibility. TheReview describes some of our plansfor making further progress.

I hope that you find this Reviewinteresting and informative. We areconstantly seeking to improve, andwould certainly like to hear anycomments or ideas for improvement.Please email your comments orsuggestions to [email protected].


ForewordTim Clarke, Chief Executive


About this Review

This is Mitchells & Butlers' firstintegrated Corporate Social ResponsibilityReview. It comprises five areas thatare of key importance to us as acompany, as well as to our customers,employees, local communities, suppliersand shareholders:

• Marketplace

• Employees

• Community

• Environment

• Corporate Governance.

The Review demonstrates ourperformance in each of the areas.

The Review covers the whole of theMitchells & Butlers Group, including,where applicable, the Alex groupof companies in Germany where we have 42 outlets.

We plan to issue a Corporate SocialResponsibility Report for the 2005financial year, using this year's Reviewas a benchmark to measure ourperformance. Subsequent reports willbe created on an annual basis.

Marketplace


‘We aim to provide the best valueexperience in the informal eatingand drinking out markets througha combination of prime locations,a wide range of food and drink,high-quality amenities, and real service and value provided by fairand competitive pricing.’

Marketplace


Our GuestsWe aim to provide the best valueexperience in the informal eatingand drinking out markets through acombination of prime locations, a widerange of food and drink, high-qualityamenities, and real service and valueprovided by fair and competitivepricing.

Customer service is fundamental toour business. We are committedto delivering a high-quality and caringcustomer experience.

Our Stance on Industry IssuesAlcohol & Social ResponsibilityDrinking and eating out are importantand pleasurable parts of life for a greatmany people in the UK. We want ourguests to enjoy visiting our pubs, barsand restaurants and to find them welcoming and safe environments.

At the same time we recognise thatexcessive consumption of alcohol canlead to health problems and contributeto public disorder. Therefore, we havecarefully developed a comprehensivepolicy for the responsible retailingof alcohol. It aims to ensure that all of our licensed premises are operatedresponsibly, safely and within the law, and provide an environment forthe sensible, controlled consumptionof alcohol.

The key components of our Alcohol &Social Responsibility Policy are:

1.Strict adherence to the law withregard to the sale of alcohol and

• Not serving customers who are

other products, most particularly:

intoxicated.

• Not serving alcohol to people who are aged under 18. If guests appear to be under 21, then we require proof that they are 18 or over. Only three forms of proof are acceptable –passport, photo driving licence or The Portman Group's Prove It card.

2. Support for the relevant agencies:

• Close working with the Police, Fire Services, Environmental Health and Local Authorities in pursuit of the four prime objectives of the LicensingAct 2003.

• Support for regional Crime & Disorder partnerships.

• Participation in local 'Pubwatch' schemes.

3.Operation of a Responsible Pricingand Promotions Policy, the guiding principles of which are:

• To offer guests real service andreal value at fair, competitive prices.

• To encourage guests to return to Mitchells & Butlers' pubs, rather thanto encourage increased consumptionby 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 '2 for the price of 1' promotions.

• To encourage and support designated driver and other anti-drink/drive activities.

Mitchells & Butlers is an associatemember of The Portman Group whichpromotes responsible drinking, andundertakes that all its promotionalactivity for alcohol complies with TheGroup's code.

4.Comprehensive staff training

We require managers to ensure that each staff member receives thorough training as to the legal requirements of their job before they are allowedto serve guests.

It is compulsory for all of our HouseManagers to complete the British

‘Mitchells & Butlers is the leading operator of managed pubs andpub restaurants in the UK. We have over 2,000 businesses offering food, drink, entertainment and accommodation in prime locationsacross the country.’


Institute of Innkeeping's NationalLicensee Certificate.

In recognition of our achievementsin responsible retailing, Mitchells &Butlers has been awarded the title ofMost Responsible On Trade Retailerof Alcohol by a leading trade journal,the Morning Advertiser.

SmokingMitchells & Butlers aims to meetthe requirements of all its customers,smokers and non-smokers alike,and to reduce the exposure of its staff to smoke.

Whilst the majority of people in theUK do not smoke, and the numberof public places allowing smoking has steadily declined over recent years,several surveys, including one on behalf of the Department of Health,show that a majority of the publicoppose a ban on smoking in pubs.Nonetheless there is clear evidenceof support for better provision fornon-smokers in pubs.

With this in mind, in 2004 we, alongwith other leading pub companies,announced a voluntary initiative toexpand the no-smoking areas in all ourpubs. We have made a commitmentthat by the end of 2005 we will have:

• No smoking at the bar.

• No smoking in back of house areas where staff work.

• Smoking areas restricted to a maximum of 65 percent of trading space, to reduce progressively to20 percent by December 2009.

• A minimum of 50 percent of allrestaurant/dining area floor spaceto be non-smoking.

Since this initiative was announcedthe Government has released a WhitePaper, Choosing Health. The WhitePaper proposes that smoking in pubsthat prepare and serve food should be banned by the end of 2008 andthat smoking at the bar be banned inall pubs by the same time in Englandand Wales. Scotland plans to introducea complete ban on smoking inenclosed public places in 2006.

Mitchells & Butlers will participate fullyin the consultation process requestedin the White Paper. We will pointout that, if enacted, the Government'sproposals risk incentivising pubs toremove food. The perverse effect ofthis would be to offer less non-smokingspace than the industry's voluntaryapproach.

We are currently implementing a trialof non-smoking pubs in order to learn more about consumer reactionsand the practical issues associated with withdrawing smoking facilities.

Licensing Law ReformWe make every effort to ensure thatwe operate all of our businessesin a responsible manner and in fullcompliance with the law.

The Licensing Act 2003 ('the Act')has bought about major changes toEngland and Wales' existing alcohollicensing regime. The Act transfersresponsibility for licensing from magistrates to local authorities, whilst

abolishing prescribed opening hours.The Second Appointed Day, fromwhich new licences will be effective,is in November 2005.

Owners of licensed premises mayapply to a local authority for permissionto open later than existing prescribedhours. Any objections from localresidents and relevant local agenciesto such applications must be takeninto consideration.

Mitchells & Butlers does not intendto apply for 24 hour opening in anyof its 2,000 pubs. We do welcome,however, the opportunity to seek toopen, for example, for an extra oneor two hours on weekend evenings atmany of our pubs where we believethat demand exists.

The Act increases the powers of thepolice and other agencies to deal with individuals causing disorder and licensed premises contributingto disorder. We support this andencourage the use of these powerswhere necessary.

Scotland currently has its own licensingregime. This is due to undergo similarchanges to those experienced inEngland and Wales; the changes willcome into effect some time during2006.

Healthy EatingThe public is becoming increasinglyaware of the links between nutritionand health.

We aim to provide a broad choice ofmenu items in our establishments so

‘ In recognition of our achievements in responsible retailing, Mitchells & Butlerswas awarded the title of Most ResponsibleOn Trade Retailer.’

Marketplace


Harvester’s Under 5’s menu includingcarefully designed healthy menu items.

that guests seeking healthier optionsare well catered for. For example,freshly grilled or roasted meat is coreto our food offer. Further examples ofour approach include offering unlimitedtrips to the salad cart in Harvester,unlimited fresh vegetables in TobyCarvery and promoting healthy itemson the Harvester children's menu.

We are working closely with the FoodStandards Agency (FSA) to improve the nutritional content of our menus. This has led to the replacement of curly fries with unseasoned potatowedges and replacing breaded chicken fillets with grilled chickenfillets in Harvester, reducing fat and salt content significantly. We have also further adapted the Harvesterchildren's menus by replacing the free carbonated drink with a free fruit juice and broadeningthe dessert menu to include fresh oranges and mandarin segments.

Other initiatives with regard to salt, andin pursuit of FSA targets are in hand.We have worked with the FSA topublish our salt reduction programmeon their website; they are publishingthis information from a range of foodindustry organisations across all sectorsin the UK.

Safety and securityHealth & SafetyThe safety of our customers isparamount. Responsibility foradherence to Health & Safety practices rests at Board level, with the officer responsible being theCompany Secretary and HR Director & General Counsel.

The Board is responsible for ensuringthat sufficient resources are availableto implement the Health & SafetyPolicy. It is also responsible forreviewing our periodic Health & Safetyaudits. The audits, which happen atleast once a year, details the overallimplementation of the policy andproposals for future improvementsin the management of occupationalhealth and safety.

The Health & Safety audit assessesevery outlet's ability to manage risk,measured against Company policy.The main causes of accidents acrossthe Company are slips, trips and falls by both customers and staff. Initiativesin place to reduce the number ofincidents include the application ofspecial non-slip chemicals on floors inhigh risk areas and improved cleaning material for kitchen floors.

Food SafetyIt is our policy to purchase foodproducts only from suppliers whoadequately demonstrate, as aminimum, that they meet therequirements of the 1990 FoodSafety Act and Regulations, andcomply with the standards of theBritish Retail Consortium.

In addition, all suppliers must givean assurance in the form of a writtenwarranty statement that they take thenecessary steps to ensure compliancewith all relevant EU and UK legislationin respect of the products they supply.

Mitchells & Butlers abides by its ownrigorous Food Safety PurchasingManual which details systems andprocedures to ensure that foodproducts comply with current foodsafety and consumer protectionlegislation. This is to make sure thatthe meals we provide to our customersare of the nature, substance andquality expected.

We use a major independent foodsafety and assurance company to auditand report upon food safety practicesin all our businesses serving food,measuring performance againstCompany policy. These inspectionprogrammes form an essential element

Marketplace

of our due diligence programme andinclude:

• Independently verified means of monitoring safety standards.

• Consistent audit systems acrossall 2000 businesses.

• An independent assessment of standards combined with technical support on performance improvement.

Fire Safety We hold two Fire Safety Weeks eachyear during which all businesses carryout fire evacuation drills and refresherfire safety training.

We carry out fire safety audits in eachof our businesses, measuring theircompliance with Company policy.Key areas of focus are highlightingthe importance of kitchen procedures such as keeping grill canopies andfilters clean, providing improvedcleaning equipment for high-levelcleaning and giving training in its use.

The Company has qualified,professional central resource tochampion Health & Safety, food safetyand fire safety issues who provideadditional technical advice and supportto our operations.

SecurityMitchells & Butlers takes the securityand well-being of its customers andteam members very seriously.

Examples of our initiatives include the use of CCTV cameras (these areinstalled in 75 percent of the estate,specifically targeting areas of need),licensed doormen in sites where they are required and warnings about handbag theft. Where there is a significant threat of handbag theft,primarily in high street pubs, we haveinstalled bag clips underneath tablesso customers can keep their belongingssecure. We have also recently

conducted a trial, in conjunction witha local design college and the police, toadapt chairs to provide a more securearea for customers to store their bags.

Sadly, crime involving cars in car parksis all too common. However Mitchells & Butlers has achieved notablesuccess in reducing car park crimeacross its estate. A programme toreduce theft and vandalism in carparks was implemented in 2004.We have implemented an initiative inpartnership with local police focusingon two primary elements: customerand staff awareness and education and the installation of CCTV cameras.

We worked with the West MidlandsPolice to prevent car crime near theMotorshow at the National ExhibitionCentre. Superintendent Peter Searsaid, ‘I am extremely pleased to saythat Mitchells & Butlers has provedto be an enthusiastic, effective anddynamic partner who clearly takesfull responsibility for protecting itscustomers from crime. It has been apleasure to work with the company.’

Disabled Customers In preparation for the DisabilityDiscrimination Act taking force in2004, we undertook a review ofeach of our pubs and have investedsignificantly in making our premisesbetter suited to welcome andaccommodate disabled guests.

We have also invested in staff training.In October 2004, we held a Disabilityand Discrimination Awareness Weekfor all of our staff who serve guests.This included exercises and disabilitydue diligence checks and hasequipped staff to better manage arange of disabilities from mobility tohearing, sight or speech difficulties.

Mitchells & Butlers is a member ofthe Employers' Forum on Disability.

‘I am extremelypleased to say that Mitchells & Butlershas proved to be an enthusiastic, effectiveand dynamic partner who clearly takesfull responsibilityfor protecting its customers from crime. It has beena pleasure to work with the company.’

Superintendent Peter Sear,West Midlands Police

Customer Complaint PolicyIf customers are not happy with theirexperience at one of our businesses,we ask them to direct their complaintin the first instance to the manager, asthe manager is best placed to resolvethe problem immediately and recovercustomers' goodwill.

Our approach is to ensure thatcustomers:

• Always receive respectful, courteous treatment when they are making a complaint.

• Are given the name of the person who is dealing with the enquiry or problem.

• Are given clear and correct answers to enquiries within specified timesfor written, telephone and personal contacts.

Our policy is for all complaints to beresolved within seven working days.Guests can escalate their complaint


Marketplace

to area management or our Guest Care team if they are unsatisfiedwith the response they receive from the manager.

All senior operations personnel receivea weekly report of any complaints. The Executive Committee receivesa monthly report which highlightsany businesses which have received three or more complaints within the last period.

As a result of this focus, the numberof complaints we receive has beenreduced, led by Harvester's reductionof 16 percent on the previous year,and Vintage Inn's 12 percent reductionon the previous year.


Employees


‘We believe that training and development is essential forall our employees. It is vital forour businesses that we retainour high performers, and helpall staff maximise their ability.’

Employees


Health & SafetyA Risk Management system is in placeto ensure Health & Safety practicesare upheld throughout the Company.This system comprises six partsworking in tandem, with the aim toensure risk is managed effectively ineach of our businesses.

Every employee is made aware ofand asked to take responsibility forthe implementation of our Health &Safety Policy.

Health & Safety PolicyAt Mitchells & Butlers, we believethat management at all levels hasa responsibility to ensure the health,safety and welfare of all our employeeswhilst at work and to protect personsin our employment against risks to health and safety arising outof our operations. In accepting thisresponsibility, management will, so far as is reasonably practicable:

• Provide and maintain equipmentand systems of work that are safe and without risk to health.

• Ensure the safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances.

• Provide such information, instruction,training and supervision as is necessary to promote the health and safety of its employees.

• Maintain work places in a condition that is safe and without risks to health and provide and maintain means of access to and exit fromsuch places of work that are safeand without risks to health.

• Provide and maintain working environments for employees thatare safe, without risks to healthand adequate as regards to facilitiesand arrangements for their welfareat work.

• Seek the full co-operation ofall employees and employee organisations in implementingthis policy.

• Ensure that all employees are fitfor the work they are required todo, and that the risk of injuriesor illness and loss of working timeis minimised.

In addition to these responsibilities,all employees are reminded that theyhave a responsibility:

• To take reasonable care for the health and safety of themselves and others who may be affected by their acts or omissions at work.

• To co-operate with the Company in complying with its legal obligations.

The Health & Safety Policy providesa framework to assist all employeesin maintaining a healthy and safework environment.

We believe it is important to measurethe effectiveness of our Health &Safety Policy. One measure is thenumber of reportable injuries per 1,000 employees. A reportable injury is one which results in 3 or moredays lost. During 2003-2004, therewere 7.6 reportable injuries per 1,000employees.

Employee SecurityA key part of training and educatingstaff relates to the assurance of theirown security.

We have developed a Retail SecurityManagement Programme to providemanagers with tools to ensureemployee safety in the business.The programme includes sectionson potential signs of suspicious activity,analysing crime in the business toensure its prevention and crisismanagement skills.

The Retail Security ManagementProgramme is delivered to all managersas part of the Certificate in RetailingManagement training course.

Employee PoliciesEqual Opportunities and DiversityMitchells & Butlers' EqualOpportunities Policy is that noemployee should suffer detriment as

Mitchells & Butlers plc – Risk Management System

Health & Safety Policy

Procedures set in each pub

Training and Educating Staff

Measurement

Review / Correct

Manage Crisis (if required)

‘Management at all levels has a responsibility to ensure the health, safety and welfare of all our employees whilst at work.’

Employees

a result of their gender, marital status,sexual orientation, colour, religion,race, nationality, ethnic origin, ageor disability.

The nature of the retail sectorgenerates a diverse and fluidworkforce. We employ a wide mix ofage ranges and nationalities across ourbusinesses in the UK. The table belowoutlines employment in the Companyby gender.

Mitchells & Butlers plc – Employment in the company bygender

women menRetail Staff 57% 43%Retail Managers 33% 67%Corporate Staff 46% 54%Senior Managers 24% 76%

We have one female Board directorand two women on our ExecutiveCommittee.

Our Chief Executive is a member ofthe Board of the Fair Cities initiative inBirmingham, a programme establishedto ensure more inclusive employmentof ethnic minorities in the workforce.

We communicate our EqualOpportunities Policy to all employeesthrough the Company intranet andEmployee Handbooks. We reviewexisting procedures regularly in orderto maintain the effectiveness of thepolicy and carry out whatevermodifications are judged necessary.

Work-Life BalanceWe see a successful work-life balancefor our employees as an integral part ofour commercial success.

Part-time working is a central feature ofour business. This enables us to offerlocal employment to groups of theworkforce unable to undertake full-timework, such as parents and students.Indeed some 84 percent of our retail

staff work part-time.

We also seek to provide flexibility forour corporate staff. Nearly 50 percentof such staff are employed on a mobilebasis. This means they are spared thenecessity of commuting to an officealthough we provide dedicated facilitiesat our Head Office for mobile workerswho wish to do so. A further 35corporate employees work part-timeor in a job share.

We have introduced flexible start andfinish times, together with a flexibleholiday benefit, to enable our corporateemployees to integrate work with othercommitments. We have also recentlyintroduced Child Care Benefit forcorporate employees, where they candirect a certain amount of their grosssalary in return for an equivalentamount of tax and National Insurance-free benefit to pay towards childcare.

‘Mitchells & Butlers' Equal Opportunities policy is that no employee should suffer detrimentas a result of their gender,marital status,sexual orientation, colour, religion,race, nationality, ethnic origin, ageor disability.’

TrainingAt Mitchells & Butlers we believe thattraining and development is essentialfor all of our employees. It is also vitalfor our businesses that we retain

our high performers, and help all staffmaximise their ability. By encouragingand developing our employees, we can help them achieve higher jobsatisfaction, and, in turn, performance.In many cases, this providesopportunities for staff to move intomore challenging and responsible roles.

During 2003-2004, Mitchells & Butlersinvested an average of six days oftraining for each of our 38,000employees, a total of over 225,000days of training.

Our training programmes reflectthe diversity of our business. Werecognise that it is essential to provideemployees with the necessary skillsand competencies to operate asuccessful business.

Employee ConsultationCommunicating with and informingour employees about topical businessmatters is an integral part of howMitchells & Butlers operates.

We use a number of informalcommunications channels, in additionto the employee magazine, intranet andbrand and department communicationforums, to help keep our employeesupdated on news, policies andCompany strategy. For example, theChief Executive gives informal briefings


Employees

to employees at the Head Office inthe central atrium. These channelsalso create opportunities to receiveemployee feedback.

Discussion GroupsEach month, we hold a discussiongroup comprising a member of theExecutive team and a randomlyselected group of corporate employees.The aim of the session is to stimulate a two-way discussion between employeesand Executive members in an informal,relaxed environment. Employees areable to ask questions about therationale behind some of the policiesand to challenge current policies andprocedures.

The topics raised at discussion groupsare wide ranging and vary from sessionto session. Recent examples includeemployee benefits, industry issues,brand offers and menu content. Aftereach discussion group, we publish a Q&A on the intranet, enabling allcorporate employees to view thefeedback.

As a result of the feedback, a newemployee suggestion box has been set up on the Company intranet,and we have introduced an initiativeto give staff tax relief on childcarecosts. The groups have proved to bean excellent format for opening linesof communication across all levels ofthe Company.

Business ForumThe Business Forum was set up tocreate a platform for the ExecutiveDirectors and representatives of thesenior management of Mitchells &Butlers and employees at all levels to meet regularly to seek views,exchange information and consult onissues, such as the performance anddevelopment of the business.

Participating employees are nominatedby a ballot of all employees and are

representative of a cross section ofthe business and the countries inwhich Mitchells & Butlers trades (UKand Germany). Representatives includeretail staff and management fromboth the Pubs & Bars Division andthe Restaurants Division. From theservice functions, both professionaland management employees arerepresented. The Board representativesare the Chief Executive, the ManagingDirector, the Finance Director and the Company Secretary.

At the 2004 Business Forum, topics ofdiscussion included employee benefits,the environment and the futuredirection of the Company. The Forum

reported on the progress of actionsimplemented from the issues raised atearlier Forum meetings. For example,following a request to add corporate job opportunities to the retail vacancylisting there has been an increase inretail staff being recruited intocorporate roles.

Two Forums are due to be held in2005.

Employee Satisfaction SurveyWe actively seek constructive feedbackfrom our staff. In striving to bean employer of choice, and activelyengaging our employees in ourbusiness, Mitchells & Butlers

recognises the importance of listeningto, and acting upon, the views andopinions of its employees.

The Employee Satisfaction Survey,distributed to all corporate staff, is atool that enables us to gain detailedand regular feedback and helps us toidentify our strengths and undertake positive action to resolve areas ofconcern. It is conducted annually andis completely anonymous.The 2004 Employee Satisfaction Surveyhad a 76 percent response rate, anincrease of 16 percent on the previousyear, and employee job satisfactionimproved by 5 percent.

‘In striving to be an employer of choice,and actively engagingour employees in ourbusiness, Mitchells& Butlers recognises the importanceof listening to, and acting upon, the views and opinionsof its employees.’

The results of the survey arecommunicated in a variety of ways.The Executive Committee is presentedwith the overall findings. Individualdepartment results are sent to allline managers and meetings areheld with respective teams to discussand understand the detail behindissues raised.

The Corporate HR team analyses thesurvey and recommends actions toimprove areas where furtheropportunities exist. The Companycommunicates the actions agreed to all


Employees

employees to advise them of progressmade and intentions for the future. For example, following the employeefeedback from the 2004 survey, a more robust process for completingperformance reviews for line managershas been put in place. This includesissuing timetables to managers,improving performance reviewdocumentation, producing acompetency development guideand holding guidance workshops.

Counselling /Employee Support/Confidential Disclosure HotlineMitchells & Butlers is committed to thehealth and well-being of its employeesand recognises that anybody, at anytime, may experience a problemthat can have an impact on healthand/or their performance. This maybe a problem arising from work itself or indeed from some personal issuecompletely unrelated to work.

To help support employees, we haveset up an Employee SupportProgramme, available at no cost to allcorporate employees, retail managers,retail assistant managers and theirfamily members. This is a confidentialand impartial counselling and adviceservice provided by an externalcompany to help resolve difficultieswhich may affect our employees'health, well-being or work performance.

If problems cannot be resolved over thetelephone, a face to face counsellingservice is available from the large teamof counsellors nationwide. In the caseof an incident of trauma involving anyour employees, counselling is alwaysoffered.

In addition to the Employee SupportProgramme, Mitchells & Butlers offers an independently administeredconfidential hotline, also known asa whistleblowing hotline, whereemployees can report any inappropriatebehaviour they encounter. We useposters and other internalcommunications to encourage ouremployees to report anything whichundermines our fundamental valuesof respect for the community andobservance by all of the higheststandards of honesty and integrity.


Community


‘Mitchells & Butlers understandsthat each of our businesses has an impact on its local community. Weaim to ensure that this impact is always positive, and we pursue this through a carefully composed blendof local and national initiatives.’

Community


Mitchells & Butlers understands thateach of our businesses has an impacton its local community. We aim toensure that this impact is alwayspositive, and we pursue this through a carefully composed blend of localand national initiatives.

We encourage the managers and staffof all our pubs to support local causesand to bring local communitiestogether. We also operate an EmployeeCommunity Award Scheme, whichenables employees who activelysupport a charity through fundraisingor voluntary work to apply for aCompany donation. In addition to localinitiatives, we use our countrywidereach to work with selected charitiesseeking to make a real difference ata national level.

In 2004, the Company donated£103,300 to worthy causes. Inaddition, non-cash contributions suchas employee time and complimentarymeals raised the total amount of donations to an estimated £758,500.

At the same time, and as a leadingcompany with its headquarters inBirmingham, we are keen to supportorganisations that further the economicand cultural well-being of the city.

The four elements of our communityprogramme are set out below.

Pub at the Heart ofthe CommunityOur employees and customers helpto raise thousands of pounds each year

‘Our employees and customers help to raise thousandsof pounds each year for local causes.’

for local causes. We actively encouragepub managers to select whichinitiatives to support, as they know best what suits their customers,employees and communities, but wemake available funds to help such local enterprise get off the ground.Many of our brands, such as EmberInns and Sizzling Pub Co, adopt acharity in their local area or co-ordinatefundraising activity across a number of their businesses. Often they usefeedback from customers to choose acharity, enabling the pubs to help givetheir charity fundraising a direct localconnection. The diverse programmeof community efforts ranges fromraising funds for local sports teams,

environmental groups, welfare andmedical charities, to providing meeting places for self-help groups.

Mitchells & Butlers introduced the'Heart of the Community' Awardsin 2004 to celebrate and recognisethe positive community impactachieved by our pub managers. Theseawards recognise the fundraising andcommunity activities which help forgegood relations with the communities in which we participate.

The entries for the 2004 awardsdisplayed the range and effectivenessof the fundraising and the communityevents held across Mitchells & Butlers

Scotland: Hunters Tryst,Edinburgh (Ember Inns.)

Midlands: Monkmoor,Shrewsbury (Activity Locals.)

North East: Woodcock,Leeds (Sizzling Pub Co.)

North West: Anderton Arms,Preston (Ember Inns.)

South East: Old Maypole,Ilford (Activity Locals.)

South West: Red Lion,Bath (Sizzling Pub Co.)

Heart of the Community Regional finalists

Community


Case Study: Heart of the Community Awards 2004The Bryncoch Inn – Winner, Heart ofthe Community Pub of the Year 2004

Bryncoch Inn Managers, Jan and Craig operate a businessthat truly remains at the heart of the local community. Thesheer number of events held in the pub and number of localclubs that meet there means very few local residents in theNeath area are unaware of the unique community role it plays. Barbeque evenings, inviting the local male voice choirto perform, hosting group meetings for the Healthy Eating Club for Age Concern and supporting local restoration projectsare some of the reasons why the Bryncoch Inn stood out.

The Bryncoch Inn reaches out to support and set up newservices for the local region. The pub set up a local actiongroup in conjunction with Keep Wales Tidy to organise litterpicking, tree and shrub planting and bird boxes for the local

area. They also organised a fundraising campaign to supportfour local schools and raised awareness of a local girlsmarathon run.

The Bryncoch donated the £10,000 award prize money toAir Ambulance Wales where it will be used to buy ten sets ofessential fireproof clothing for the air ambulance paramedics.

pubs. The judging panel selected seven regional finalists who were allawarded £1,000 for their chosencharity, as well as an overall nationalwinner who received a £10,000 prizefor their nominated cause.

Bryncoch Inn managers, Jan and CraigWigley collect the top award fromMike Bramley, Managing Director,Pubs and Bars.

We look forward to showing ourappreciation for continued communityand charity activity in the Heart of theCommunity Awards 2005.

National ActivityIn October 2001, Mitchells & Butlersappointed Victim Support as its UK charity partner over three years. Victim Support benefited from a£150,000 donation focused onsupporting the charity's specialisedvolunteer training and assistingin research and development workinto child victims of crime.

Money raised also helped develop new training courses for Victim Supportvolunteers to provide practical help andemotional support to people affected by serious crime. The Serious CrimeTraining programme enables volunteersto be trained to a consistently highstandard across the country. During thecharity partnership over 100 volunteerstook part in Serious Crime Training,providing vital support to over 500victims and their families whose lives

had been disrupted by serious crimes.

In April 2005, Mitchells & Butlersannounced that Barnardo's would be its new charity partner. Barnardo'sworks with the most vulnerable children and young people, helpingthem transform their lives and fulfiltheir potential. As the UK's leadingchildren's charity, supporting 100,000children and their families, Barnardo'shas an excellent network of localprojects enabling us to increase our commitment to the communities in which we operate.

Mitchells & Butlers will supportBarnardo's by encouraging employee-based fundraising through events, inaddition to an initial company donationof £50,000.


‘The generous support of Mitchells &Butlers and their staff will help us tosupport even more vulnerable childrenand young people through our vitalwork in local communities, in schools and with families. Thank you on theirbehalf for helping us to give them abetter start in life!’

Stephen O'Connor,Director of Fundraising, Barnardo's

Mitchells & Butlers also administersthree charitable trusts which wereset up by the founders of the Company,Henry Mitchell and William Butler,and their family members for thebenefit of employees and localcommunities. They are The MitchellFund, The Henry Mitchell MemorialScholarship Fund and the WilliamWaters Butler Welfare Fund. Theirprincipal objectives are to providefinancial assistance to those in needand support the provision of education.

Some of our brands opt to supporttheir chosen charity on a nationalscale. For example, our O'Neill's chainheld activities and collected donationsraising over £24,000 for the Royal National Institute for the Blindthroughout the pubs' St Patrick's Daycelebrations. In 2004 Harvesterrestaurants nominated the Make AWish Foundation UK as their chosencharity. Customers helped managerscreate the Harvester Cheesy Joke

Book in aid of the charity and manyrestaurants took part in the EarlybirdChicken Run sponsored walk to helpraise over £6,000.

Launching the Harvester Cheesy Joke Book.

Support in BirminghamAs a company with its head officelocated in the centre of Birmingham,we have a history of supporting variouslocal Birmingham projects andorganisations. We are proud to have supported the City of BirminghamSymphony Orchestra (CBSO) for over24 years. In 2004, we extended oursuccessful partnership with the CBSOby establishing a new sponsorship programme, 'CBSO on the Road'.This is a series of specifically devisedcommunity concerts which enables the CBSO to offer concerts to charities,community groups, schools, arts organisations and music clubs acrossthe Midlands region, bringing music to local communities and into venueswhich do not have the facilities toaccommodate a full orchestra.Over 20 community concerts were held

in 2004 which generated much positivefeedback from both musicians andcommunity groups about the popularityof the performances. Due to the success of the partnership, we arecontinuing our sponsorship into 2005with another series of concerts plannedthroughout the year.

In addition, we are sponsoring a CBSOconcert in St. Philip's, BirminghamCathedral to mark the centenary of theDiocese.

CBSO musicians perform in Birmingham.

Mitchells & Butlers is now enteringits third year as a Major CorporatePatron of the Birmingham Repertory Theatre. This has developed ourassociation with arts organisationsin Birmingham and also enablesus to offer our employees specialbenefits, such as complimentary tickets to performances.

Our Role as NeighboursPubs, bars and restaurants play avaluable role in the culture and

‘ The generous support of Mitchells & Butlers and their staff will help us to support even more vulnerable children and young people through our vital work in local communities, in schools and with families.’

Barnardo’s celebrity supporter, Christopher Timothy helps Tim Clarke,Chief Executive, Mitchells & Butlers and Stephen O’Connor, Director of Fundraising, Barnado’s launch the new partnership.

Community

economy of the communities inwhich they are situated and Mitchells& Butlers is committed to ensuring that our businesses fulfil this rolesuccessfully and remain on goodterms with those who live nearby.

In doing this we:

• Encourage our Managers to be activemembers of the community and to deal directly with neighbours quickly and amicably to resolve issues that may arise. If a mutually acceptable solution is not possible, or requires action that is outside the Manager's authority, they are quickly to involve their line management in order to achieve a resolution.

• Aim to take all reasonably practicablesteps to minimise disturbances to thelocal community.

• Aim to keep our premises clean,neat and tidy.


Environment


‘Mitchells & Butlers was recognised at the National Transport Awards forthe Provision of Travel information, informing our corporate employeesabout using alternatives to their carsto commute to the office.’

Case Study: Green Apple Awards Cheshire Cat, Chester

A green-fingered Cheshire manager had the opportunityto visit the House of Commons after scooping a nationalenvironment award.

Paul Brady, of the Cheshire Cat on Whitchurch Road inChester, was presented with his Green Apple Award byPatricia Hewitt MP, then Secretary of State for Trade &Industry, in the autumn of 2004.

He was recognised for undertaking several environmentalprogrammes, including erecting over 50 bird nesting boxes inthe grounds of the Cheshire Cat, and creating his own wildlifereserve and English orchard.

The National Green Apple Environment Awards are organisedby the Green Organisation, an independent environment groupwhich promotes environmental endeavour.

Environment


We take our environmentalresponsibilities seriously, believing thatresponsible environmental activity is inthe interests of both our business andthe communities in which we operate.As a national retailing organisation withpubs and pub restaurants throughoutthe country, our business has an effect on many local communities. Our overall policy is to seek continuousimprovement in environmental matters,and detailed below are examples of ourcommitment to minimise our impact onthe environment.

RecyclingIn 2004 we established a new initiativewith our waste collection contractorfor collecting and recycling glass andcardboard in our businesses. A trialto test the infrastructure and monitor

volume took place in 100 businessesin the Midlands. Following the successof the trial, the initiative has been rolledout in 900 businesses across the UK.

We have set increasing recycling targetvolumes, year on year, and intendto increase recycling by 27 percent by the second year of the initiative.

At the corporate head office inBirmingham, we recycle over 20percent of waste generated.

Energy ConsumptionWe are continuing to make progressin energy saving. During 2004, webegan installing electricity meters inbusinesses, which capture electricityconsumption data every half hour. The metering programme will provide

information for retail management tohelp reduce electricity consumption.Following a successful pilot, in whichthe trial sites achieved a measurablereduction in electricity consumption,the programme is being rolled outnationally. By April 2005, there wereapproximately 1,700 meters in place,each generating a weekly electricityconsumption report.

We see the focus on electricity asa key step in creating awareness ofthe importance of monitoring theconsumption of natural resources.Although our consumption of waterand gas is less than that of electricity,we intend to install water and gasmeters from 2006.

‘We take our environmental responsibilities seriously, believingthat responsible environmental activity is in the interests ofboth our business and the communities in which we operate.’

Case Study: Wildlife TrustVintage Inns

Vintage Inns launched a partnership with the Wildlife Trustin the spring of 2004 by setting up recruitment points at allinns for local trusts to sign up members. These are stockedwith literature containing information on the latest WildlifeTrust projects, and maps to show guests where local reservesare in the area.

Several Vintage Inns have held Wildlife Trust garden partieswhere they provided the Trust with a table in the garden topromote their reserves and merchandise, and talk to guestsabout their activities. These have proved popular with boththe Trust and guests. The Inns also participate in wildlifesurveys, allowing the Trust to encourage guests to monitorwildlife in the local area.

Across the country, Vintage Inns recruitment has contributed2,000 memberships for the Wildlife Trust, and over £20,000in membership fees.

Wildlife Trust representatives, David Spivak and Alan Shearinglaunch the partnership along with Tracy Lawson and Barry Chaineyfrom Mitchells & Butlers.

Environment


‘We see the focuson electricity as akey step in creating awareness of the importance of monitoring the consumption of natural resources.’

Emissions

In 2004, Mitchells & Butlers wasrecognised at the National TransportAwards for the Provision of TravelInformation, informing our corporateemployees about using alternatives to their cars to commute to the office.Over 150 employees are now usingalternative transport methods.

We also measure C02 emissions fromour company car fleet. Since 2002,despite growth in the business, C02emissions have been reduced by1.5 percent, partly by reducing the number of cars in the fleet, and partlyby some switching from petrol-fuelledto diesel-fuelled vehicles.

Corporate Governance


‘Our businesses and employeesare part of a wider community and are expected to act in a way that respects the social, economic,and environmental well-being ofthe wider world.’



Code of EthicsOur Executive Committee has adopteda Code of Ethics to promote the honestand ethical conduct of our SeniorExecutive and Financial Officers. Thecode includes:

• The ethical handling of actualor apparent conflicts of interest between personal and professional relationships.

• A requirement that any hospitality from suppliers must be approved by the Commercial Director, with a presumption against its acceptance.

• Promoting full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed by Mitchells & Butlers plc.

• Promoting compliance with all applicable rules and regulationsthat apply to the Company and its officers.

As mentioned in the Employees sectionon p.15, we have a confidentialwhistleblowing hotline for any employeewishing to report any concern that theymay have that they feel unable to raisewith their line manager.

Business ConductOur businesses and employees are partof a wider community and are expectedto act in a way that respects the social,economic and environmental well-beingof the wider world. Our BusinessConduct guidelines describe thestandards of behaviour expected fromthose working for the Company. Ourcorporate reputation depends on allstaff acting in good conscience andbehaving with integrity in our dealings

with employees, shareholders,customers, suppliers and all otherstakeholders.

Board ResponsibilitiesThe Board's responsibilities areoutlined below. The full detail isavailable in our Annual Report and Financial Statements 2004.

Board Structure and ProcessThe Board is committed to compliancewith the principles of corporategovernance as set out in the CombinedCode on Corporate Governance ('TheCode'). Following the findings of the Higgs Committee on the role andeffectiveness of Non-ExecutiveDirectors and the Smith Committee onaudit committees, a revised CombinedCode was issued in July 2003 ('the Revised Code'). Its provisions becameeffective for companies' financialperiods beginning on or after 1November 2003 and technically do notimpact this Company until the financial year which commenced on 26September 2004. The Company has,however, already taken steps to meetthe requirements of the Revised Codeand considers that as at 25 September,2004, it was fully compliant andremains so.

Risk Management and InternalControlsThe Board is responsible for theCompany’s system of internal controland risk management and for reviewingits effectiveness. In order to dischargethat responsibility, the Board confirms that is has established the proceduresnecessary to apply the Code, including

clear operating procedures, lines ofresponsibility and delegated authority.These procedures have been in placesince the Company was listed and areregularly reviewed by the Board.

Remuneration policy for ExecutiveDirectorsThe following policy has appliedthroughout 2004 and will apply for thefinancial year 2005. For subsequentyears, the Remuneration Committeewill review the policy and recommendchanges as appropriate.

• Remuneration packages are designed to attract, retain and motivate Executive Directors ofthe highest calibre.

• The packages will be competitive within the leisure retailing industry and in those markets from whichthe Company recruits.

• In fixing remuneration, note willbe taken of reward levels in thewider 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 the individual and of the Company.

• Basic salary will normally be setat median market level.

• Using target or projected value calculations, performance related incentives for Executive Directorswill equate to approximately 60 percent of total remuneration.

• Share and cash incentives will be

‘ Our corporate reputation depends on all staff acting in goodconscience and behaving with integrity in our dealings with employees, shareholders, customers, suppliers and all other stakeholders.’


designed so as to align the interestof Executive Directors with thoseof shareholders. For this purpose, Executive Directors are required to build and maintain a significantlevel of ownership of the Company's share, which is two times salary,but three times salary for the Chief Executive. Shares arising from share schemes normally should not be solduntil the minimum level of ownershiphas been satisfied.

Accounting and AuditingThe Directors are required by theCompanies Act 1985 to preparefinancial statements for each financialyear, which give a true and fair view ofthe state of affairs of the Company asat the end of the financial year and ofthe profit or loss for the financial year.

Following discussions with theauditors, the Directors considerthat in preparing the financialstatements within the Company'sAnnual Report andFinancialStatements 2004, the Company hasused appropriate accounting policies,applied in a consistent manner andsupported by reasonable and prudentjudgements and estimates, and thatall applicable accounting standardshave been followed.

The Directors have responsibility forensuring that the Company keepsaccounting records which disclosewith reasonable accuracy the financialposition of the Company and which enable them to ensure that thefinancial statements comply with theCompanies Act 1985.

The Company's Audit Committee meetsthe requirements of the revised UKCombined Code and the US Sarbanes-Oxley Act requirements, as applicableto non-US companies. A copy of theCommittee's terms of reference ispublicly available within the Investorsection of the Company's website,

and a formal report on the activitiesis prepared each year and includedin the Company's Annual Report andFinancial Statements 2004.

Financial Reporting TransparencyMitchells & Butlers plc is committedto open disclosure and communicationwith shareholders.

‘Mitchells & ButlersRisk Management and Disclosure Forum exists tomonitor operationalactivities and toensure a consistentapproach to managing riskoccurs throughout the Company.’

Risk ManagementA Mitchells & Butlers RiskManagement and Disclosure Forumexists to monitor operational activitiesand to ensure a consistent approachto managing risk occurs throughoutthe Company. The Forum meetsquarterly, chaired by the Director ofRisk & Compliance and attended bythe Company Secretary, with the RiskManager, Senior Operational Managers and Senior Heads of service functions.

The Company has operational, officeand central crises plans in operationwhich are regularly tested, includingdisaster recovery plans andmanagement of product recall.

SuppliersMitchells & Butlers abides by theCode of Ethics issued by The CharteredInstitute of Purchasing & Supply.

Our guiding principles on corporateprocurement are to:

• Enable the Company to conductits procurement activities in a safe, ethical and professional manner.

• Exclude suppliers that disregard health, safety & welfare.

• Ensure all personnel conform with national and EU laws.

• Ensure representatives are fair and reasonable with suppliers.

• Exclude suppliers that exploit people unfairly.

• Utilise suppliers that preferentially conserve the environment.



Contacts and Feedback

Mitchells & Butlers welcomes yourfeedback to this Review. If you havecomments regarding this review,please email us at: [email protected]

Or write to us at:Corporate Social ResponsibilityCommunicationsMitchells & Butlers27 Fleet StreetBirmingham B3 1JP

Further information onMitchells & Butlers plc can be found at: www.mbplc.com

www.mbplc.com/responsibility

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