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Slowdown for Mitchells & Butlers

Half-yearly profit down for the pubs group – partly due to wet weather.

The British restaurants and pubs operator Mitchells & Butlers has reported a slowdown in sales, citing persistent rainy weather as a factor. In the 11 weeks to 7 April, like-for-like sales grew at 0.2 per cent – a steep decline from 4.4 per cent in the 17 weeks to 21 January.

The O'Neill's and Harvester owner posted a profit of £36m, or 8.7p per diluted share, for the 28-weeks ended 7 April 2012, compared to £37m, or 9p per diluted share, for the same period last year.

Pre-tax profit was £42m (2011: £41m), while operating profit was £118m (2011: £125m).

Earnings before interest, tax, depreciation, amortisation and movements in the valuation of the property portfolio were £178m (2011: £183m).

The retained estate revenue grew by 6.3 per cent to £969m, with like-for-like growth of 2.7 per cent. This comprises the ongoing business and excludes the major disposal of 333 non-core pubs in November 2010.

The company’s net operating margin declined by 0.7 percentage points, as a result of inflationary cost increases in energy and food. Net cash flow was £12m after expansionary capital and exceptional items.

The company, which delivered annualised savings of £10m, opened 35 new sites and seven conversions during the period with expansionary capex of £42m. Exceptional operating costs were £20m including £14m of business and systems restructuring costs.

Bob Ivell, executive chairman of Mitchells & Butlers, said:

We have remained firmly on the front foot with a relentless focus on actions that will drive the medium and long term success of the business. We are continuing to deliver a resilient operating performance, maintaining the roll-out of our industry-leading brands and progressing our major business change programme. I am pleased with the progress being made to appoint a new CEO and further non-executive directors and look forward to being able to make an announcement at the appropriate time.

Despite challenging trading conditions, we remain confident that we can deliver a full year result in line with expectations.

The company’s portfolio of brands and formats includes Harvester, Toby Carvery, Vintage Inns, Premium Country Dining Group, Crown Carveries, Sizzling Pubs, All Bar One, Browns, Miller & Carter, Metro Professionals, Alex, Nicholson's, O’Neill’s and Ember Inns.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.